A Late Bankruptcy Claim

A Late Bankruptcy Claim

April 01, 2004

A late bankruptcy claim did not prevent the IRS from collecting back taxes.

A telephone company in Florida failed to collect a 3% federal excise tax on telephone services before the company filed for bankruptcy.  The IRS filed a claim in the bankruptcy proceeding for $583,619 in back taxes by the “claim bar date” in September 1998 based on information that had been supplied by the company.  The claim was marked “pending examination.” The company later filed a plan of reorganization stating that it expected the total tax payments it would have to make would not exceed $300,000.  The bankruptcy court confirmed the reorganization plan in June 1999, without any objection from the IRS.

Seven months later, the IRS increased its tax claim to $2.8 million based on additional information.

The court said the fact that both the “claim bar date” had passed and the reorganization plan had been approved did not bar the IRS from asking for more taxes.  It said the issue was whether the telephone company was on notice of the IRS claim before the claim bar date.  It concluded it was in this case because the increased claim was for the same tax as before and the telephone company should have known the proper amount it owed since it had all the information.  The case is In re The Telephone Company of Central Florida.  The bankruptcy court released its decision in March.

However, a court barred the IRS from making a late claim in another bankruptcy case.  The IRS filed its claim four months after the claim bar date.  It was late because it was not on the list of creditors who were informed of the bankruptcy, and it moved promptly after receiving notice.  A bankruptcy court said in a decision in early April that the tax agency was out of luck.  This case is In re Johnny Hernandez.

Keith Martin