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another $15,000 in damages because the debtor can recover damages against the
couple sold their house for $15,000 less IRS for a willful violation of a discharge
than what they would have because they order is IRC Sec. 7433(e).
accelerated the sale out of fear of an IRS The IRS, citing Murphy, 892 F.3d
levy. Although McAuliffe was represent- 29, 39 (1st Cir. 2018), and In re Helmes,
ing Williams-McAuliffe for free after 336 B.R. 105 (Bankr. E.D. Va. 2005),
he removed himself as a party in the contended that Sec. 7433(e) requires
case, Williams-McAuliffe also sought to proof that a specific IRS officer or
recover legal fees incurred in pursuing employee, rather than the Service as a
the action. whole, willfully violated the discharge
Issues: The issue before the court order, and that a creditor should not be
and interest totaling less than $500 on was whether Williams-McAuliffe held in contempt of an order where the
a post-petition tax debt and declined could recover damages for violations of violation was inadvertent and due to
to award other claimed damages or the discharge order in the McAuliffes’ clerical error. The Service argued that
attorneys’ fees, where none were paid bankruptcy case when the IRS at- its notices to the couple were automati-
to the attorney/taxpayer/co-debtor tempted to collect tax debts that had cally generated and thus inadvertent.
representing his wife. been discharged. Moreover, it argued, they were non-
Facts: Brian James McAuliffe, Generally, a bankruptcy court has threatening and should not be regarded
an attorney, and his wife, Suzanne wide powers in a bankruptcy case to as an attempt to collect the discharged
Williams-McAuliffe, received a bank- levy sanctions under Bankruptcy Code debt. The IRS also argued that its
ruptcy discharge in September 2019 of Section 105 for violations of a discharge delays were caused by the COVID-19
debts that included an IRS claim for order under Bankruptcy Code Section pandemic and were exacerbated by the
$13,625 relating to tax years 2010 and 524. However, in a case involving the couple’s having replied to the wrong
2011, of which $7,231 was secured. IRS, the only statute under which a service center.
During the bankruptcy proceedings,
they accrued a new liability for the
2018 tax year.
Despite the discharge, the IRS sent Clothing donation deductions plummeted
letters in February and March 2020
The aggregate amount carried forward to Schedule A, Itemized Deductions, for
seeking to collect the 2010 and 2011
noncash charitable donations of clothing and accessories fell by 42% between tax
liabilities. McAuliffe wrote the IRS
years 2017 and 2018. The latter year coincided with an increase in standard deduction
letters, including one in March 2020, amounts by the 2017 law known as the Tax Cuts and Jobs Act, P.L. 115-97.
contesting the collection and advising
the IRS of the discharge. The IRS did $12 billion
not acknowledge this letter, however, $11.6 billion
until late September 2020, when it re-
plied it would need 60 days to review the
liability. However, the IRS had already
abated the 2010 and 2011 taxes the day
before the date of its reply. $7 billion
In December 2020, the bankruptcy $6.8 billion
IMAGE BY ILLUSTRATOR DE LA MONDE/GETTY IMAGES adversary proceeding against the IRS, 2016 2017 2018 2019
court reopened the McAuliffes’ case,
and a few days later the couple filed an
seeking damages for violations of the
bankruptcy discharge order. On the eve
of trial, McAuliffe removed himself as
plaintiff in the case, leaving his wife
as the sole plaintiff. He continued to
represent her in the case, however.
Williams-McAuliffe sought as
damages the costs of the action and

journalofaccountancy.com Source: IRS Tax Statistics, Individual Noncash Charitable Contributions. September 2022 | 35