TWC may take certain collection actions, and may be prohibited from taking others, as the manner of closing indicates.
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Chapter 3: Special Actions Unit |
comments to:Regulatory Integrity Division - Collections |
TWC may take certain collection actions, and may be prohibited from taking others, as the manner of closing indicates.
No closing actions will delay the production of Bankruptcy Default Notices. There are many instances when a debtor will re-file for bankruptcy within a short time of the dismissal of, or discharge in, a case.
SAU administrative support personnel or AE’s will screen incoming notices for cases that may be candidates for closure and possible collection actions. Necessary employer files will be ordered. The staff will update the Fiduciary Record before review by AE’s. Procedure for closure will be based upon whether or not a claim was filed in the case.
Check the Fiduciary Record and the Delinquency Comments screens to see if a claim was filed or if a comment is the only reference to the bankruptcy. Additional updates to the Fiduciary Record (claim dates, amounts, etc.), should be done at the discretion of the AE. Updates must be done one day before deletion of the record. Closing papers and bankruptcy folders will be associated with those files that have claims. If there was no claim filed, the closing papers will be sent to the Transaction History screen as Closed Bankruptcy Documents. Create a Memorandum Notice to File and update the Database. If the OAG was involved in the case, send them a signed copy of the Memorandum Notice to File.
Review the bankruptcy and employer files and remove all documents concerning the particular bankruptcy case number you are closing. Save the documents listed below and discard the remainder.
Cover Sheet - Copy of Memorandum Notice to File.
Closing Notice ( Dismissal, Discharge, Final Filing, and Docket Printout) File stamped copies of the claims. Older cases may not have file stamped claims, so retain the file copy of the claim.
Copies of any liens, judgments, or assessments.
Correspondence of any type from or to the OAG concerning treatment of our claim.
Discharge Notices.
Notice of Conversion.
Confirmation Notices or Documents.
Plan of Reorganization.
Disclosure Statement - if on large corporations.
Objections to our claim and any responses to objection by the OAG.
DO NOT retain any documents that are not relevant to our claim, such as Notices of Appearance, Motion to Retain Counsel, etc.
Staple together all documents with the Memorandum Notice to File on top marked "INTACT".
You are now ready to review the Employer Master File to close the bankruptcy off the system.
DAY 1
If there is no debt, or the debt has been charged to uncollectible, then go to the Fiduciary screen.
DAY 2
On the command line, key the update screen. Verify any updates made the previous day. Press tab right key, and enter a D (for delete), then enter one of the IID #'s noted. The Bankruptcy information comes up on screen with a note at the bottom, "Press PF6 to confirm". Press PF6 key. Then if you have more IID #'s for the same account, press PF2 to start again. The number for the account should remain. Repeat each step for each IID is noted.
NOTE: You may not do this the same day that you delete the records.
DAY 3
Verify that the Fiduciary record has been deleted which also releases the Bankruptcy System STOP. If money allocation reverses off the account to available money, it will need to be reallocated by the SAU AE working the account or other authorized AE.
Leave the comments on an uncollectible debt. If the comment has anything to do with Bankruptcy and the debt is not uncollectible, make a printout of that screen. Give printouts to SAU supervisor to approve deletion of old comments.
Review the Entity Comments screen for field AE comments. If there are comments concerning the bankruptcy, notify the field person and ask them to delete comments.
On all closed bankruptcy accounts, review the tax liens on the Lien, Judgment and Assessment Recording screen, to be sure that a tax lien was not issued after the petition date. If the tax lien was issued after the petition date, prepare a Request for Tax Lien Release form to AAU, Releases. Return these employer files, with bankruptcy close packet attached and lien release form on top, to SAU for review.
In addition, all closed bankruptcy accounts should be reviewed to see if a Default Notice should be sent or the delinquency should be charged to uncollectible. Individuals or partnerships with judgments or assessments, with quarters within statute to the petition date should not be charged to "U". Chapter 7 corporations should be charged to "U." Make notations on the Memorandum Notice to File showing charged to "U", etc.
If a Default Notice is required, give the folder to an SAU AE for appropriate action with the bankruptcy close packet attached to the file, or transfer to the Default Notice file cabinet. Otherwise, after all work has been completed and verified, place bankruptcy close packet in the "Micrographics" box. Return the employer file to the Records Management Center (RMC).
The following situations will be encountered when preparing default notices:
Pre-petition debt that does not have an existing tax lien. Remove the Fiduciary record before requesting default notice. After default notice has been mailed return tax folder to RMC. Account will go back into ACAP.
Pre-petition delinquency with no post- petition debt that has an existing tax lien. Remove the Fiduciary Record before requesting the default notice. After the default notice has been mailed return the employer folder to RMC.
Account has both pre-petition and post petition delinquency and an existing tax lien for the pre-petition delinquency. Account will need another tax lien for the total debt, both pre & post petition delinquency. Balance of the account for tax lien must meet minimum criteria. Key a Restrictive Legal Action "Stop" on the Stop screen. Enter a 30-day release date. Remove the Fiduciary Record. After the default notice has been mailed, stamp "PRIORITY" on the default notice work sheet and transfer the tax folder to Tax Lien and place on the table in the AAU Supervisor's cubicle.
Account has an active bankruptcy with post-petition debt (Chapter 13) or post - confirmation debt (Chapter 11). A default notice will usually be mailed for just the post-petition debt. A copy of the default notice is to be mailed to the debtor's attorney. Proceed with routine collection action for the post-petition debt if this debt meets the current minimum criteria for tax lien, individual and partnership assessments, or corporation and officer liability assessments. Mark worksheet to be returned to the SAU AE who initiated default notice to review the bankruptcy status.
Closing of a case by dismissal normally allows unfettered pursuit of remaining delinquencies.
Discharge of an individual debtor in a Chapter 7 does not normally discharge taxes, and does not normally discharge any tax liens.
Consideration will be given to matters of statute, tolling of statute, repetitive filings, and nature of debtor’s assets at the time of filing.
Discharge of an individual debtor in a Chapter 13 may discharge unpaid delinquencies, if the TWC was notified or included in the Creditor’s Mailing Matrix. If such notification was not given, or such inclusion not made, the delinquency may not have been discharged. Referral to the OAG may be made as appropriate.
Corporations do not receive discharges.
After the bankruptcy has been discharged/dismissed or closed, and if the TWC account is inactive, the default notice is to be mailed to the address of record and to the address on the Docket, if it is different than the address on the Employer Master File. Other address verification sources may be consulted as appropriate.
If the account is active, the default notice will be sent to the address of record on the Employer Master File and to the address shown in the Docket. Updating of addresses will require review of, and use of, involve the following screens:
Address Change/Closing Information for the Address of Record.
Delinquency Names/Addresses (update screen) to review address information.
Delinquency Names/Addresses to activate, inactivate, add, or change address information.
The issuance of the Default Notice will be made using the Bankruptcy Default Notice Request screen, according to the categories listed below:
DISCHARGED- Bankruptcy case is discharged/closed. Use for individual debtors who have received a discharge but still owe non-discharged taxes. Stay is lifted.
Once the non-statute delinquency is requested, routine collection efforts will resume. Accounts will require a new tax lien if existing tax lien(s) does not cover a non-statute delinquency. Delinquency must meet current minimum criteria for a lien.
When the officer liability portion of delinquency has been requested, routine collection efforts resume.
DISMISSED- Bankruptcy case is dismissed. Stay is lifted. Will proceed with routine collection action. Will require new tax lien if existing tax lien(s) does not cover entire delinquency. Balance of the account for tax lien must meet minimum criteria.
When the officer liability portion of delinquency has been requested, and the corporate charter has been forfeited, routine collection action continues.
POST CONFIRMATION - Plan has been confirmed and post-petition quarters are in arrears. May usually proceed with routine collection efforts on post-petition quarters for Chapter 13 cases, with a copy to Debtor's Attorney. In Chapter 11 cases, normally pursue collection of post-confirmation quarters only.
DISC/ASSMNTM- Case was discharged/dismissed/closed, judgment or assessment was obtained pre-petition. Regular non-statute renewal efforts will be maintained along with any additional collection action that might become necessary.
NOT LISTED - TWC not listed in bankruptcy plan. Verified by copy of plan. Mailing matrix verifies omission of TWC as a creditor. After confirmation, proceed against entire delinquency in most instances. In Chapter 13 cases, copy to Trustee and/or Debtor's Attorney.
BKJADOOM - Case was discharged/dismissed, judgment or assessment was obtained pre-petition and a portion of the debt was not covered by the judgment/assessment. Regular renewal efforts will be maintained along with any additional collection action that might become necessary.
Review of the Bankruptcy Default Notices the next day is made with reference to the Delinquency Action History screen, and the output notices. Verification of the addresses, continuing delinquency and propriety of the action requested is made at this time. Correct notices will be sent; incorrect notices will be discarded and re-requested as appropriate. The control log for the notices will be annotated.
Those accounts that have post petition delinquency and existing tax liens for the pre-petition delinquency will require a tax lien for the entire debt. Balance of the account for tax lien must meet current minimum criteria for total debt
Before forwarding employer file to AAU for a tax lien, place a Restrictive Legal Action Stop on the account for 30 days if the account is in ACAP. This will remove account from ACAP. The tax file is to be set on the table of the AAU supervisor cubicle after the default notice has been mailed. Verify that the closed bankruptcy packet has been attached to the default notice worksheet.
The Special Actions Unit will not pursue any active collection action on individuals who have received a discharge if all delinquency is more than three years old at the petition date. The debt will be charged to uncollectible and no default notice will be sent. However, the taxes and any liens securing the debt are not normally discharged. Appropriate comments will be entered
Do not request any new tax liens on any debt that is more than 3 years old after a discharge. Send the file to CAU marked as "do not renew" for either Judgments or Assessments that are more than three years old as of the petition date.
If a Judgment or Assessment has not been abstracted as of the petition date, do not abstract after discharge for any debt more than three years as of the petition date. The non-dischargeable portion may be abstracted if it meets the minimum criteria for individuals, partnerships, and corporations, and officer liability.
In cases where there is delinquency within the three-year period (that is, not discharged), we will charge the older debt to uncollectible and proceed with normal collection action, beginning with a default notice, on current delinquency. This procedure is recommended by the OAG to avoid a violation of Section 523(a)(1)(A) of the Bankruptcy Code.
In situations where a spouse was not listed on any TWC account documents, and there was no determination of liability of a spouse for the debt, a filing that includes that spouse can not be the basis for determining liability for a pre-petition debt.
Confirmation may act as a discharge for post- petition debts that arose prior to the date of confirmation for corporate accounts in a confirmed Chapter 11 plan. Questions in this matter should be referred to the OAG for clarification before any collection action is taken.
Confirmation does not act as a discharge for post-petition debts that arose prior to the date of confirmation for individual accounts in a confirmed Chapter 11 plan.
Any discharge for such delinquency would still be in effect even if the bankruptcy case were dismissed some time after confirmation. TWC would still be barred from collection action in that situation.
If such debt is discharged, TWC is barred from collection on that debt, as above. The affected period(s) would be charged to "U", and appropriate explanatory comments would be added.
If a Chapter 11 debtor should accrue post-confirmation delinquency, civil collection action can be taken on those periods. Amounts due post-confirmation are not affected by the Automatic Stay, and can usually follow normal collection procedures. If any questions arise concerning bankruptcy and the collection actions being taken, SAU will consult with legal counsel as appropriate.
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