More Bankruptcy Stuff

 

      It is very important to know the history of your tax situation if you are considering a bankruptcy of taxes.  The most useful tax transcripts to order from the IRS are the MFTRA-X and the MFT-30.  When you examine the MFTRA-X, you will need to be careful.  The IRS transaction Code 150 means that a tax return has been filed but it does not distinguish between a 6020(b) return filed by the government and a return filed voluntarily by the individual.  Generally a return filed by the IRS will not suffice to satisfy the two-year rule.  There is some case law that stands for the fact that returns must be filed at the appropriate service center.  If the returns are simply handed to a revenue officer or mailed to the wrong IRS office, they may not be deemed filed.  See In re Savage, 218 B.R. 126 (10th Cir. BAP 1998). 

 

      Some states require that an amended return be filed following an assessment by the IRS of additional tax.  The filing of the new return might trigger a new 2-year or 3-year rule.  See In re Blutter, 177 B.R. 209 (Bkrtcy. S.D.N.Y. 1995); but also see In re Jerault 208 B.R. 183 (9th Cir. BAP 1997 for a contrary position).  Remember also, that a prior bankruptcy or an offer in compromise might stay the time periods for the time that the BK or OIC  is pending plus an extra six months.  See In re West, 5 F3d 423 (9th Cir. 1993).  Also, an extension of time to file the return delays the start of the three year period for the time of the extension.

 

      In some states, an extension to file a federal return, extends the state period for the same or more months automatically.  In California, a three-month extension at the federal level extends the time for the state to six months.  Be very careful in a situation like this or you may not bankrupt state taxes even though your federal taxes are dischargeable.  Be aware also that sometimes the IRS files its lien in the wrong county.  If the IRS has not filed a lien in the county in which the individual owns property, then the IRS does not have a secured lien. 

 

      An important tidbit to remember is that if the IRS does not file a proof of claim in a Chapter 13 Bankruptcy in a no asset or unsecured situation, the IRS is out of luck.  They have 180 days from the date the bankruptcy was filed to file a proof of claim.  All time periods are tolled during the time that a bankruptcy is pending.  You cannot wait out the two and three year time periods in a Chapter 13.  If the IRS assessment is not valid, the 240-day time period from the date of assessment may not have run.

 

      The Bankruptcy Code requires that a tax return be filed for at least two years before the bankruptcy filing date. (11 U.S.C.Section 523(a)(1)(B).  The IRS may file returns for individuals who do not file; however, the courts are likely to rule that the IRS' return is not sufficient for purposes of the two year rule.  Courts have also ruled that "frivolous" tax returns are not valid for purposes of the bankruptcy statutes.  See In re Thompson 207 B.R. 7 (Bkrtcy.M.D.Fla. 1997): Campbell v. U.S. 140 B.R. 571 (W.D.Okla 1992). 

 

      Interpretations of Section 523 of the Bankruptcy Code have defined a return:  "A return must have sufficient data to calculate a tax liability.  The document must purport to be a return.  There must be an honest and reasonable attempt to satisfy the tax laws.  The individual must sign the return under the penalty of perjury.  See In re Hatton, 216 B.R. 278, 282 (9th Cir. BAP 1997).

     

      There are some cases, however, that do allow information provided by the individual to serve as a return for purposes of Section 523.  The court ruled in In re Hatton, 216 B.R. 278 (9th Cir. BAP 1997), that a SFR followed by a signed voluntary payment agreement and 433-D constitutes a return for purposes of the two year rule under Section 523.  A SFR prepared with the taxpayer's cooperation can constitute a return: See In re Parker 199 B.R. 792 (Bkrtcy.M.D.Fla 1996).  Also IRC Section 6020(a) says that a return signed by a taxpayer "may be received by the Secretary as a return of such person."  In Berard v. U.S. 181 B.R. 653 (Bkrtcy.M.D.Fla 1995), the court ruled that a Form 4549 relating to income tax examination changes may be considered a tax return for purposes of dischargeability.  Testifying in a court under the penalty of perjury may constitute the equivalent of a filed tax return.  See  In re Elmore 165 B.R. 35 (Bkrtcy S.D. Ind. 1994);  and an individual signing a form that contains the same information that is in a return may constitute a tax return for purposes of bankrupty: In re Lowrie 162 B.R. 864 (Bkrtcy.D.Nev. 1994).

     

      The IRS is trying to argue in Bankruptcy Court that if a return is filed late, it is not a return for purposes of the Bankruptcy Code. However, the debtors are still winning quite a bit on this issue.  See In re Savage 218 BR 126 (10th Cir. BAP 1998).  Also see In re McGrath, 217 B.R. 389 (Bkrtcy. N.D.N.Y. 1997).  And see In re Pierchoski 220 B.R.20 (Bkrtcy W.D.Pa. 1998).

     

      Also note the following cases with important related issues:  The time during which an offer in compromise was on appeal tolled the running of the 240 day periods.  In re Genung 220 B.R. 505 (Bkrtcy.N.D.N.Y. 1998).  The IRS violated the automatic stay when it sold some of the debtor-equipment lessor's equipment in auction to pay other taxpayer's claims, Hanna Coal Co. Inc. v. IRS 218 B.R. 825 (W.D.Va. 1997).  A prior bankruptcy did not toll the 240-day period for purposes of discharge of tax in second bankruptcy. In re Little, 216 B.R. 769    (Bkrtcy E.D.N.C. 1997). 

THE BASIC ELEMENTS OF CRIMINAL PROCEDURE

 

 

          The laws of criminal procedure must be in accord with the United States Constitution.  The sources of this law are the state statutes and the federal criminal statutes (including the rules of criminal procedure). The criminal procedure of the states and of the federal government does differ.

 

 

          State Criminal Procedure:

 

1.  Arrest

2.  Defendant booked at police station.

3.  Defendant charged with crime.

4.  Proceedings before judge

5.  Preliminary hearing

6.  Filing of indictment or information.

7.  Arraignment.

8.  Motions and plea.

9.  Discovery.

10. Extraordinary writs.

11. Trial.

12. Sentencing.

13. Motions after trial

14. Appeal

 

          Federal Criminal Procedure

 

1.  Arrest, search, and seizure--the gathering of evidence.

2.  Appearance before judge.

3.  Preliminary hearing

4.  Grand jury indictment.

5.  Filing of indictment by government.

6.  Arraignment

7.  Motions and pleas.

8.  Discovery.

9.  Extraordinary writs.

10. The trial

11. Sentencing.

12. Motions after trial.

13. Appeal.

 

Every case is different but the above steps are the basic process of a criminal case.