Chief Counsel advises that a Chapter 7 trustee may receive a debtor's returns on written request, and return information without one

Plain-English summary

This is informal Chief Counsel advice, sent by email, about what tax information the IRS may hand over to a Chapter 7 bankruptcy trustee in a "no-asset" case. Tax returns and return information are confidential under Internal Revenue Code § 6103, but the statute has exceptions for bankruptcy. Under § 6103(e)(5)(A), the IRS may disclose the debtor's returns to the trustee on written request, for the tax year the bankruptcy began and any earlier year. Return information (as opposed to the return itself) may also be disclosed to the trustee for those same years, and that disclosure does not require a written request. The attorney flagged one caveat: if the bankruptcy is an involuntary case, disclosure would require court approval. This matters to trustees and IRS personnel handling bankruptcy cases, because it draws the line between what a trustee can get simply by asking in writing and what needs a court order.

Ruling snapshot

• Question: What returns and return information of a debtor may the IRS disclose to a Chapter 7 trustee, and what does that disclosure require?
• Outcome: advice given (returns disclosable on written request under § 6103(e)(5)(A); return information disclosable without a written request; involuntary cases require court approval)
• Key authorities: IRC § 6103(e)(5)(A)

Full text (IRS public release)

ID: CCA_2021072313395914
UILC: 6103.05-10, 6103.05-09

Number: 202150016
Release Date: 12/17/2021
From: -------------------
Sent: Friday, July 23, 2021 1:39:59 PM
To: ---------------------
Cc: -------------------------
Bcc: --------------------
Subject: RE: Request for Disclosure Advice to Chapter 7 Trustee in Ch. 7 No-Asset Case -------------------

Hi ------

I agree with your analysis below. Based on the facts you provided, under IRC
6103(e)(5)(A), upon written request, disclosure of the returns of a debtor (for the taxable
year in which the case commences or any preceding taxable year) may be disclosed to
the trustee. Return information can also be disclosed to the trustee (for the same
taxable years as above), but does not require a written request. The only potential issue
I see here is if this is an involuntary bankruptcy case, which would require court
approval for disclosure. Please let me know if you have any follow-up questions.

Thanks,

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