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  • The Department of Revenue recently sent a Notice of Final Assessment to my client who is in bankruptcy. Why? Is this not a violation of the U.S. Bankruptcy Code?

The Department of Revenue recently sent a Notice of Final Assessment to my client who is in bankruptcy. Why? Is this not a violation of the U.S. Bankruptcy Code?

An assessment (either preliminary or final) which is entered by the Department against a bankrupt taxpayer is entered in order to establish the amount of a bankrupt claim with the Bankruptcy Court and it is a notification to the taxpayer of the amount of taxes owed to the state. If the taxpayer feels that the amount assessed is incorrect, the taxpayer should contact the Assessment Unit (334-242-1340) and explain their contentions and also provide any records which will substantiate their claim that the assessment is incorrect. Bear in mind that all jurisdictional time limitations for appeals must be adhered to. No. The entry of an assessment against a bankrupt taxpayer is not a violation of the Automatic Stay provisions of the U.S. Bankruptcy Code. (See U.S.C. Title 11 Section 362(9)(d).) This section provides for the making of an assessment of tax against a bankrupt taxpayer by a governmental unit. Assessments may be entered but the governmental unit cannot act to obtain possession of property of the bankruptcy estate. (See U.S.C. Title 11 Section 541 for definition of “property of the estate.”)

Related FAQs in Assessment Procedures, Business and License

The ONE SPOT system will allow returns to be filed with ACH Debit and ACH Credit method payments only. The system will not allow an ACH Debit taxpayer to complete their return filing without completing the necessary information to authorize the ACH Debit payment. The ACH Credit payment is separate from the ONE SPOT system and must be initiated by the taxpayer through their banking institution. Returns successfully submitted for ACH Debit and ACH Credit taxpayers will be exported to the local government.

Upon the completion of the Third Party Designation Form, ALDOR can provide the returns, payments and payment data files to the authorized third party administrator.

When an electronic payment is received by ALDOR in error, the payment will post to the taxpayer’s ALDOR local tax account. ALDOR will not be able to automatically transfer these payments to the non-administered local government due to the possibility the taxpayer’s payment will reject after ALDOR has transferred the payment, causing complicated collection issues. ALDOR will need the taxpayer to advise the Department with what to do with that payment.

The only non-administered local government taxes to be processed through ALDOR will be payments received as the result of legal action, such as final assessment, garnishments, and liens, entered into when the local government was state administered. Payment data for these payments will be available during the first week (5-10 working days) of the month following the tax collection period through the ALDOR website.