IRS changes position on ERISA plans in BK

      The IRS's Chief Counsel office announced it will no longer argue the IRS may include in the value of its secured claim the debtor's interest in a pension plan that is excluded from property of the estate under Section 541(c)(2), a change in its litigating position on the application of Bankruptcy Code Section 506(a) to pension plans excluded from a bankruptcy estate under Bankruptcy Code Section 541(c)(2).  

     The Ninth Circuit in U.S. v. Snyder, 343 F3d 1171 (9th Cir. 2004) ruled that the IRS was not secured in Bankruptcy.  The districts have a split of authority as to whether the IRS was secured.  

     The new IRS stance will have great benefit for potential Chapter 13 Debtors.  Previous to this declaration by the IRS, in some jurisdictions the pension was an asset of the estate and the claim of the IRS was secured in the pension if a lien had been properly filed.  

     The IRS lien still attaches to the pension and if it has not expired when the debtor becomes eligible to receive distribution from the pension, the IRS will be able to reach the funds, as distributed.  When  the lien expires, however, the IRS will have no further interest in the plan.

     The effect of the position of the IRS is to make feasible many Chapter 13 plans which would have otherwise been impossible to fund. To review the Courts Opinion:

  CLICK HERE    

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The Tax Group LLC
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Contact Us:
The Tax Group LLC
dba
Attorneys Tax Group
82 E. State St. Suite E
Eagle, Idaho 83616
1 877 TAX CREW
1 877 829 2739
Fax:208 938 8503
Martelle Law Offices PA
208 938 8500
webmaster@attorneystaxgroup.com