Caroline D. Ciraolo was quoted in a recent Tax Notes article entitled “IRS Wants Seat at Debtors’ Bankruptcy Proceedings,” published on November 16, 2021. The article explores new IRS plans for agents to attend debtor-creditor negotiations in bankruptcy proceedings.
The article notes:
Guillot and Ciraolo spoke November 15 at a conference hosted by the American Institute of CPAs and the Chartered Institute of Management Accountants about the IRS’s efforts to crack down on tax avoidance by high-income nonfilers and high-wealth taxpayers. In fiscal 2021 the agency hired more than 650 revenue officers for the field and put 518 new collection representatives on the phones, and it plans to place 800 employees into its newest and largest automated collection system operation in Puerto Rico in 2022.
Guillot said most of the 123 new insolvency employees are being trained by IRS revenue officers “to reinsert the culture of civil investigative thought in those bankruptcy specialists.”
Meetings between debtors, creditors, and equity security holders are governed by 11 U.S.C. 341. Debtors meet in open hearings with their creditors to answer questions about their financial situations under penalty of perjury, explained Ciraolo.
“Think about a . . . summons interview with the IRS, where you’re very careful about what your client says,” Ciraolo said. “It’s kind of like that, but it’s in a public forum. Now imagine the IRS there, taking careful notes.”
“If you are doing insolvency work or bankruptcy work, be prepared,” Ciraolo said. “You’re going to be asked to consult on these cases. It’s a great line of work to be in, but you have to tread carefully now that [the IRS is] stacking these hearings.”
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