IRS trying to clawback funds 3 years after bankruptcy discharge - need advice for fighting levy & seizure notice

This is a serious situation that needs immediate attention. The IRS typically cannot collect on tax debts that were properly discharged in bankruptcy, but there are some important exceptions. First, you need to determine if the tax debt was actually discharged in your bankruptcy. Not all tax debts are dischargeable - generally, income tax debts must be from returns filed at least 2 years before bankruptcy, the taxes must be at least 3 years old, and the IRS must have assessed the taxes at least 240 days before filing. If your debt didn't meet these criteria, it might not have been discharged. Second, you should request a Collection Due Process hearing immediately by filing Form 12153. This will put a temporary hold on collection activities while you sort this out. Don't ignore it hoping it will "blow over" - that's terrible advice from the IRS rep. Third, gather all documentation from your bankruptcy case showing the tax debt was included and discharged. The bankruptcy discharge order and schedules listing the IRS debt are crucial here. Finally, you may need specialized help. I'd recommend finding a tax attorney who specializes in both bankruptcy and IRS disputes rather than just consulting your bankruptcy attorney or CPA separately.

I had a somewhat similar situation last year with the IRS trying to collect on discharged tax debt. After months of getting nowhere with regular IRS reps and my original bankruptcy attorney, I finally found a solution that worked. I used https://taxr.ai to analyze my bankruptcy discharge paperwork and tax transcripts. Their system actually identified that my discharge order had specific language about my tax debts that I hadn't fully understood. They explained exactly which paragraphs to reference when dealing with the IRS and helped me draft a proper response letter. The best part was they found a technical issue with how the IRS had processed my bankruptcy notification which gave me leverage in disputing their collection attempts. If you're hitting walls with the standard advice, it might be worth uploading your documents there to get a detailed analysis of your specific situation. It saved me from having to hire an expensive tax attorney.

I just wanted to update everyone. After seeing the recommendation here, I decided to try https://taxr.ai for my bankruptcy/IRS situation. I was hesitant at first, but I was getting desperate after multiple confusing calls with the IRS. I uploaded my bankruptcy discharge papers, the levy notice, and my tax transcripts. Within a day, I got back a detailed analysis showing exactly where the IRS made a procedural error. The bankruptcy discharge was properly recorded in their system initially, but somehow got "unflagged" during a system update 2 years later. The report showed me exactly which IRS publication numbers and bankruptcy code sections to reference, and included a template letter to send to the specific IRS department that handles bankruptcy discharges (not just the general collection department listed on the levy notice). I sent everything certified mail as they suggested, and just heard back yesterday that the levy has been released! Saved me thousands in attorney fees and months of stress. Just wanted to share since my situation was so similar to the original post.

Something I haven't seen mentioned yet - you absolutely need to talk to someone higher up at the IRS than the frontline phone reps. My brother was in almost the identical situation last year (bankruptcy discharge, then levy notice 2 years later). He spent WEEKS trying to call the IRS main line, getting disconnected, waiting on hold for hours, and being transferred to people who couldn't help. Finally, he used https://claimyr.com to get through to an actual IRS agent who could access his bankruptcy records. There's also a video showing how it works at https://youtu.be/_kiP6q8DX5c if you're curious. Once he actually got through to someone in the right department, they were able to see that his bankruptcy discharge had been properly recorded but not properly coded in their collection system. The agent put an immediate hold on the collection while they corrected their records. The frontline phone people often don't have access to the full account history or bankruptcy records, so getting to the right department is crucial.

I need to eat my words and update everyone. After posting my skeptical comment, I was still facing my own IRS nightmare (similar situation with discharged taxes). Out of desperation, I tried the Claimyr service. I was shocked when I actually got a call back with an IRS agent on the line within about 45 minutes. I explained my situation and asked to be transferred to the Insolvency Unit as suggested. The person there immediately pulled up my bankruptcy records and confirmed the taxes should not be collected. They placed an immediate hold on collections and sent me a confirmation letter that arrived yesterday. The agent explained there was a coding error in their system that failed to properly flag these tax years as discharged. I've been fighting this for MONTHS with endless hold times and confused representatives. Can't believe I got it resolved in one phone call once I actually reached the right department. If you're dealing with bankruptcy/tax issues, definitely ask specifically for the Insolvency Unit.

One crucial thing that hasn't been mentioned - check your tax transcript! You can get this free online at the IRS website. Look for Transaction Code 971 with "Bankruptcy Discharge" noted. If that code appears for the tax years in question, print multiple copies as evidence. If it doesn't appear, that might be the root of your problem - the IRS system may not have properly recorded your discharge. Also, under bankruptcy law, the IRS can audit/review/assess taxes for previously unfiled returns even after discharge. Make sure you're not dealing with a different tax year or unfiled return that wasn't included in the original bankruptcy.

The IRS bankruptcy procedures are so messed up. I work in an accounting office and see this more than you'd think. Here's what usually happens: 1. Bankruptcy gets discharged properly 2. IRS central records note the discharge correctly (code 971) 3. But the collection system operates semi-independently 4. During system updates/migrations, the collection flags sometimes get dropped 5. Automated collection systems start up again even though central records show the discharge This isn't legal, but it happens due to their antiquated computer systems. The fastest resolution is usually getting someone from the Insolvency Unit to manually re-flag your account as discharged in both systems.