State and Local Tax Claims in Ch. 11 Bankruptcy: Challenges and Strategies for Attorneys and SALT Practitioners

COVID-19 has caused an increase in bankruptcy filings by companies across a variety of industries. Attorneys and tax practitioners must understand key aspects of bankruptcy law related to state taxes and implement strategies to ensure a smooth emergence by their clients from bankruptcy without the burden of state and local tax claims.

As they apply to state tax claims, special provisions of bankruptcy law must be examined during Chapter 11 bankruptcy proceedings. Most states have designated departments within their tax agency specifically tasked with pursuing state tax claims when businesses file for bankruptcy. Once a state or local agency files a proof of claim, and the claim amount is allowed either by a negotiated resolution between the government and taxpayer representatives or by a bankruptcy court decision, the claim is paid following the reorganization plan provisions subject to the Bankruptcy Code.

However, counsel and tax practitioners must recognize potential issues associated with how the bankruptcy court will determine claims, objecting to state tax proof of claims and key provisions of state tax settlement agreements.

Listen as our panel discusses the challenges for state and local tax claims in bankruptcy proceedings and related rules, examines proof of claims and objections, and offers techniques for negotiating settlements with a state tax agency. The presenters are the authors of the article, "Go Broke: State Tax Bankruptcy in the COVID Era," which appeared in the December 21, 2020 edition of State Tax Notes.

1. Interplay of bankruptcy rules and state taxes
2. Negotiating settlements with a state tax agency
3. Bankruptcy court authority to determine claims
4. Objections to state proof of claims
5. Best practices for counsel and tax practitioners

The panel will review these and other key issues:

• How can the bankruptcy court and bankruptcy rules be used in resolving state tax claims for companies?
• How are state tax claims handled in bankruptcy proceedings?
• What authority does a bankruptcy court have in determining claims?
• What are the key factors in negotiating settlements with a state tax agency?

Learning Objectives

After completing this course, you will be able to:

• Understand the impact of bankruptcy rules on state tax claims
• Identify key methods in negotiating settlements with state tax agencies
• Recognize challenges of business reorganization and state tax liability in Ch. 11 bankruptcy

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.