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ABI's Commission to Study the Reform of Chapter 11, whose 22 members constitute a venerable bankruptcy industry Hall of Fame, held a hearing yesterday to gather feedback on what is right and wrong with the statutory scheme that has governed chapter 11 bankruptcy since 1978, Reuters reported. The commission's charge includes "literally considering starting from scratch and re-inventing the statute," said Robert Keach, attorney and commission co-chairman. The commission plans to eventually submit a report to Congress, targeted for April, 2014, that could serve as "part blueprint, part outline" for new legislation, Keach said. The commission will study 13 areas of bankruptcy law, including labor & benefits issues, financing rules and government supervision. It is collecting feedback from several groups through a series of hearings, with upcoming dates at the National Conference of Bankruptcy Judges in San Diego on Oct. 26, and a convention of trade group the Turnaround Management Association in Boston on Nov. 3. Read more:
http://www.reuters.com/article/2012/10/18/bankruptcy-reform-idUSL1E8LHP…

To obtain the prepared witness testimony from yesterday's hearing, view background information on the Commission members or to see upcoming dates of activity, please click here: http://commission.abi.org/

Much may not have been said about Enhanced Section 179 expensing on the campaign trail, and there’s no mention of it in President Obama’s 2013 budget or Romney’s economic plan, but it’s among the reasons that businesses are so worried about the looming fiscal contraction at the end of the year, The Washington Post reported yesterday. Most discussions of the fiscal cliff have focused on the automatic sequester of spending cuts and the tax hikes that are set to take effect after Dec. 31, but there are many other tax breaks that are scheduled to end at the same time. Anticipating this complication, the Senate has put together a stopgap $205 billion tax-extender bill, but despite bipartisan support it stalled in the Senate last month.

The Internal Revenue Service urged a bankruptcy judge to reject solar panel maker Solyndra LLC’s bankruptcy plan Wednesday, saying that it amounts to little more than an avenue for owners of an empty corporate shell to avoid paying taxes, The Washington Times reported yesterday. Attorneys said in filings that the tax breaks would be worth more money than the funds set aside for creditors. Taxpayers are on the hook for more than a half-billion dollars after the company filed for bankruptcy last year, just two years after winning a loan guarantee from the Department of Energy. Under Solyndra’s reorganization plan, two investors in the company, Madrone Partners LP and Argonaut Ventures, together would own nearly all of a shell company formed in the wake of Solyndra’s bankruptcy reorganization. Government attorneys have said that while the reorganization plan had “some marginal benefits,” there was no doubt that the most important priority was to “preserve a shell corporation to be able to reduce future tax liabilities by hundreds of millions of dollars.”

Internal Revenue Service Commissioner Douglas Shulman announced Wednesday that he will leave his post next month, ending a four-and-a-half year term during which he modernized some of the agency’s infrastructure while cracking down on tax dodging by corporations and offshore tax evasion by individuals, The New York Times reported yesterday. A former private-equity investor and financial regulator, Shulman took office with a mandate to improve an agency that had been criticized as inefficient and unfair. He jump-started the process of updating many of the IRS’s outdated computer systems—some of which rely on the same types of data tapes that were in use half a century ago—and pushed through more rigorous training and standards for paid tax preparers. But his signature achievement was cracking down on tax avoidance. Shulman rattled many accountants and major corporations by instituting new regulations requiring that companies reveal more details to the IRS about the aggressive strategies they use to lower their federal income tax bills. He was heralded as a deft administrator when he was appointed by President George W. Bush in 2008. Those skills helped him run the mammoth IRS bureaucracy, which has 100,000 employees and a $12 billion annual budget, and collects $2.4 trillion in taxes each year. Shulman, who indicated this year that he would be leaving his post soon, will step down on Nov. 9. Deputy Commissioner Steven Miller will step in until a new commissioner is sworn in.

The U.S. government is gearing up for a politically charged fight over Solyndra's bankruptcy plan, as the former solar panel maker supported by President Barack Obama revealed a further $23 million in potential tax breaks for its venture capital backers, Reuters reported on Friday. A U.S. bankruptcy judge on Friday cleared the way for creditors to vote on the plan, and scheduled a hearing to consider approval on Oct. 17. An attorney for the Internal Revenue Service said his agency anticipated objecting, setting up a fight over tax breaks. They are on top of $341 million in potential tax breaks available to venture capital backers Madrone Partners and Argonaut Ventures that Solyndra disclosed earlier last week.

Thousands of Medicaid health care providers still got paid by the government even though they owed hundreds of millions of dollars in federal taxes, according to congressional investigators, The New York Times reported today. A legal technicality is making it harder for the Internal Revenue Service to collect. In a report released Thursday, the Government Accountability Office said that Medicaid payments to doctors, hospitals and other providers are not technically considered federal money because they are channeled through state programs. Because of that glitch, the IRS cannot just shut off payments to collect tax debts. Investigators recommended that the IRS reassess its policies.