Can the bankruptcy court decide tax disputes?
Yes, one of the most useful aspects of bankruptcy is the power of the bankruptcy court to decide disputes between the debtor and a creditor, even if the creditor is the IRS. In general, the court in a no asset Chapter 7, where there will be no payment on claims of creditors, has no interest in resolving disputes about taxes that will survive the bankruptcy. But, in Chapter 13, there is always a distribution to creditors and therefore there is a real need for the court to decide disputed claims. The bankruptcy court may be the quickest and cheapest way to get a fair determination about a tax dispute.
