Bankruptcy and OICs. - Free Online Library
According to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. a Georgia district court in William K. Holmes, MD GA, 3/16/04, the
bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. acted within its jurisdiction in issuing an order directing the
IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. to consider a debtor's offer-in-compromise (
OIC "Oh, I see." See digispeak.
(chat) OIC - oh, I see. ), notwithstanding its policy against considering OICs from persons involved in pending
bankruptcy proceedings bankruptcy proceedings n. the bankruptcy procedure is: a) filing a petition (voluntary or involuntary) to declare a debtor person or business bankrupt, or, under Chapter 11 or 13, to allow reorganization or refinancing under a plan to meet the debts of the party .
Facts: William K. Holmes, a debtor, owned approximately 3.2 million shares of WorldCom stock in 2000, which, at one time, had a value of about $200 million. As WorldCom began to show signs of financial difficulty, the debtor's stockbroker sold his shares as they decreased in value to meet margin calls.
Although the sale triggered capital gain with accompanying tax liabilities, the debtor did not receive sales proceeds, because they went directly to pay margin debt. On July 1, 2002, the debtor filed a Chapter 11 bankruptcy petition.
The IRS filed a proof of claim that included a priority claim for $9,372,245 in income tax and interest and a $920,462 general unsecured claim for penalties. The debtor submitted an OIC to the IRS for $621,326, which it rejected; it would not process the offer because it does not consider OICs from persons involved in pending bankruptcy proceedings.
The debtor then filed a motion in bankruptcy court to determine tax liability and to object to the IRS's claim. He sought an order requiring the IRS to consider his OIC, arguing that 11
USC An abbreviation for U.S. Code. Section 525 prohibits discriminatory treatment, including the denial of consideration of an OIC, against debtors involved in bankruptcy.
The bankruptcy court rejected the debtor's argument as to 11 USC Section 525, but in line with the reasoning of In re Macher, 303 BR 798 (WD VA 2004), ordered the IRS to process and consider the OIC. It based its ruling on 11 USC Section 105, which provides that a bankruptcy court "may issue any order, process, or judgment that is necessary to carry out the provisions of this tide." The IRS appealed, arguing that the (1) bankruptcy court lacked subject matter jurisdiction to order the IRS to consider the OIC and (2) order violated the Anti Injunction Act in 26 USC Section 7421(a).
Decision: The district court affirmed the bankruptcy court's order directing the IRS to consider the debtor's OIC. The district court agreed with the reasoning of the bankruptcy court, its reliance on Macher and the broad reading afforded to 11 USC Section 105 by other courts. The district court dismissed as "
misplaced mis·place
tr.v. mis·placed, mis·plac·ing, mis·plac·es
1.
a. To put into a wrong place: misplace punctuation in a sentence.
b. and misleading" the IRS's arguments surrounding the possible future effects of the bankruptcy court's decision and the connection with the
Anti-Injunction Act The Anti-Injunction Act, , is a United States federal statute that prohibits any federal court from issuing an injunction against proceedings in any state court, except within three specifically defined exceptions. .
According to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. a Georgia district court in William K. Holmes, MD GA, 3/16/04, the
bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. acted within its jurisdiction in issuing an order directing the
IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. to consider a debtor's offer-in-compromise (
OIC "Oh, I see." See digispeak.
(chat) OIC - oh, I see. ), notwithstanding its policy against considering OICs from persons involved in pending
bankruptcy proceedings bankruptcy proceedings n. the bankruptcy procedure is: a) filing a petition (voluntary or involuntary) to declare a debtor person or business bankrupt, or, under Chapter 11 or 13, to allow reorganization or refinancing under a plan to meet the debts of the party .
Facts: William K. Holmes, a debtor, owned approximately 3.2 million shares of WorldCom stock in 2000, which, at one time, had a value of about $200 million. As WorldCom began to show signs of financial difficulty, the debtor's stockbroker sold his shares as they decreased in value to meet margin calls.
Although the sale triggered capital gain with accompanying tax liabilities, the debtor did not receive sales proceeds, because they went directly to pay margin debt. On July 1, 2002, the debtor filed a Chapter 11 bankruptcy petition.
The IRS filed a proof of claim that included a priority claim for $9,372,245 in income tax and interest and a $920,462 general unsecured claim for penalties. The debtor submitted an OIC to the IRS for $621,326, which it rejected; it would not process the offer because it does not consider OICs from persons involved in pending bankruptcy proceedings.
The debtor then filed a motion in bankruptcy court to determine tax liability and to object to the IRS's claim. He sought an order requiring the IRS to consider his OIC, arguing that 11
USC An abbreviation for U.S. Code. Section 525 prohibits discriminatory treatment, including the denial of consideration of an OIC, against debtors involved in bankruptcy.
The bankruptcy court rejected the debtor's argument as to 11 USC Section 525, but in line with the reasoning of In re Macher, 303 BR 798 (WD VA 2004), ordered the IRS to process and consider the OIC. It based its ruling on 11 USC Section 105, which provides that a bankruptcy court "may issue any order, process, or judgment that is necessary to carry out the provisions of this tide." The IRS appealed, arguing that the (1) bankruptcy court lacked subject matter jurisdiction to order the IRS to consider the OIC and (2) order violated the Anti Injunction Act in 26 USC Section 7421(a).
Decision: The district court affirmed the bankruptcy court's order directing the IRS to consider the debtor's OIC. The district court agreed with the reasoning of the bankruptcy court, its reliance on Macher and the broad reading afforded to 11 USC Section 105 by other courts. The district court dismissed as "
misplaced mis·place
tr.v. mis·placed, mis·plac·ing, mis·plac·es
1.
a. To put into a wrong place: misplace punctuation in a sentence.
b. and misleading" the IRS's arguments surrounding the possible future effects of the bankruptcy court's decision and the connection with the
Anti-Injunction Act The Anti-Injunction Act, , is a United States federal statute that prohibits any federal court from issuing an injunction against proceedings in any state court, except within three specifically defined exceptions. .