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How to Avoid Objections by the United States of America on Behalf of its Agency, the Internal Revenue Service

Both individual and corporate Chapter 11 Debtors are subject to objections by the United States of America on behalf of its agency, the Internal Revenue Service.  Here are a few small tips to help prevent those objections:
  1. Consult your tax adviser or CPA and see if it is appropriate to file a tax return on behalf of the bankruptcy estate.  
  2. Review the claim filed by the IRS and work informally with your IRS Insolvency agent prior to filing an objection to the IRS proof of claim.  Many items can be worked out without getting the United States' Attorney's office involved. 
  3. Obtain property records and review lien history to ensure that the IRS has a secured claim in the County that it alleges that it has a secured claim in.  It is possible that the lien is recorded in the wrong county and there is no secured claim.  
  4. Serve the right party.  The United States is required to be served at several addresses in adversary or contested matters, including the Attorney General.  The Court Manual has the appropriate addresses. 
  5. Pay interest on your priority claim and secured claims and ensure that the claim is paid within sixty months of the petition date, not the confirmation or effective date.  The interest rate should be paid consistent with section 511 and is currently five percent at the time this is published.  
  6. It is possible that your secured claim portion is also priority and needs to be paid within sixty month of the petition date.  You may need to contact your insolvency agent for a breakdown of the IRS' position of what portion of secured is also priority. 
  7. The US Attorney's office will object if your plan proposes to discharge liability in an individual Debtor's case prior to completion of the plan payments.  
  8. Address feasibility in your disclosure statement and support it with operating reports to prevent the IRS from objecting to plan feasibility. 
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