9th Circuit Allows IRS To Collect Debtors' Delinquent Taxes

The Ninth Circuit U.S. Court of Appeals has ruled that the IRS's collection efforts related to adebtor couple's delinquent taxes were not barred by the statue of limitations, nor was the liability itself dischared in bankruptcy.

Michael and Georgina Severo had contended that when they received a dischare of their Chapter 7 bankruptcy petition, their outstanding taxes were also discharged.

The Ninth Circuit ruled that the initial ruling of the U.S. Tax Court was proper, and said that during bankruptcy the statute of limitations for collecting taxes is tolled.