Rev. Proc. 76-23

Section 1 Purpose

The purpose of this Revenue Procedure is to inform the trustee or other fiduciary representing the estate of the bankrupt or debtor in any liquidation or rehabilitation bankruptcy proceeding of the procedure to be followed in obtaining an expeditious audit of the Federal tax returns filed by the fiduciary.

Sec. 2 Background

While the District Directors are under no legal obligation under the Internal Revenue Code to audit the returns filed by the fiduciary of a bankruptcy estate, it is recognized that as a practical matter the estate cannot be closed until the expiration of the period of limitations on assessment has expired, even though the fiduciary is ready to make distributions to creditors and close the estate. Moreover, under the Bankruptcy Act the fiduciary has an obligation to close up the estate expeditiously. See Advisory Committee's Note to Bankruptcy Rule 605(a) and Rule 903.

Sec. 3 Application

In the event the fiduciary of a bankruptcy estate is ready to close the estate, a written application, in duplicate, under penalties of perjury, requesting a prompt audit may be filed with the District Director for the district in which the case is pending (Marked for the "Personal Attention of The Chief, Special Procedures Staff. DO NOT OPEN IN MAILROOM.") An exact copy of the return or returns filed by the fiduciary with the Service Center or the District Director shall be submitted with the application together with a copy of the order allowing fees and fixing administrative expenses. The application shall state the name and location of the office where the returns were filed. Within 60 days from the receipt of the application, Audit will advise the fiduciary whether the returns filed by the fiduciary are being selected for examination or are being accepted as filed. If the fiduciaries are notified that the returns are being selected for examination, action will be taken to close out the case as soon as possible. Returns selected for examination will be handled on an expedite basis and the fiduciary will be advised of the results of the examination in accordance with normal closing procedures.