In re Holmes (02-52793)
The debtor owed a substantial federal income tax obligation. The IRS refused to receive and consider his offer-in-compromise during the pendency of his chapter 11 case. The Court held that the IRS's refusal was not prohibited by the anti-discrimination provisions of 11 U.S.C.A. § 525(a). The Court, however, held that it could, under 11 U.S.C.A. § 105(a), order the IRS to receive and consider an offer-in-compromise. The Court stated that the IRS's policy not to participate in the offer-in-compromise procedure while a taxpayer is in bankruptcy frustrates the basic principles of the Bankruptcy Code and I.R.C. § 7122.