Contact The 505 Project

The 505 Project is a nonprofit educational initiative focused on teaching bankruptcy and tax attorneys about the power of 11 U.S.C. § 505—a rarely used section of the bankruptcy code that allows courts to determine tax liabilities. Our goal is to help professionals understand and apply this tool to provide faster, fairer outcomes for their clients.

Yes. Everything shared on this site, including research, discussions, and educational materials, is completely free to access. Our mission is to spread awareness and encourage collaboration—not to monetize this information. But the information on this website is and will remain copyrighted material.

The timing is critical. Many bankruptcy and tax professionals are struggling to help clients find faster paths to tax resolution. Section 505 offers a potential solution that’s been hiding in plain sight. The 505 Project was formed to accelerate learning, collaboration, and early test cases because of the coming wave of restructurings due to tariffs, inflation, and other economic turmoil on the immediate horizon.

It’s one of the most overlooked sections in bankruptcy law. Few tax professionals know it exists, and even fewer bankruptcy attorneys have used it strategically. The 505 Project is working to prove its potential by finding and documenting cases that can establish precedent and make the law work better for everyone involved.

No. The 505 Project is a nonprofit. The goal is to educate, collaborate, and share knowledge freely with the legal community—not to profit from it. This ensures the information remains transparent, accessible, and unfiltered by commercial interests.

Possibly—and that’s part of the reason the nonprofit exists. We expect open debate and scrutiny. If the IRS challenges the approach, it will only help clarify how the law can and should be applied. That’s how legal progress is made.

Not necessarily. When done correctly, these cases can be handled under Subchapter V, which is designed to move quickly and minimize costs. The goal is to pre-package strong, well-supported cases that proceed efficiently and establish solid case law for others to follow.

Not at this time, not while the non-profit application is pending.

Yes, by seeking for and advocating for the coupling of 11 USC section 505 and section
533 we want to obtain offsets for borrowers on SBA, USDA and other government
backed loans who may be entitled to seek and petition for such relief.

The Internal Revenue Service owes many taxpayers for a pandemic era tax relief
program for which they applied and have not been paid. Most of the claims which may
make sense to sue the IRS on start at $250,000, which via 11 U.S.C. 533 could be used
to write down SBA or USDA or other government loans in an immediate manner.

We do not have an official position from the United states trustee but prior to leaving his
employment on September 30, 2025 James discussed this program with key personnel
at the USTP.

Bankruptcy judges have been granted discretion under 11 USC section 505A the ability
to abstain from hearing such matters. The timing of the lawsuit against the IRS is
affected by a bankruptcy judge abstaining and deferring to a higher court such as
District Court. The 505 Project exists to coach bankruptcy attorneys and bankruptcy
judges and their staff through the less technical pieces of cases that might be properly
brought before the court using section 505 in the wake of the Loper Bright and other
recent Supreme Court decisions.

The answer to this question is unknown, that is why the 505 project exists. The 505 project will coach and encourage the SBA and its partner banks to survey their borrowers, especially borrowers whose loans have gone into the banks’ special assets portfolio to determine if there is indeed an untapped (and unencumbered) source of capital that could quickly recapitalize the loan in the manner outlined on this website via offsets.

The 505 project is unaware of any sub chapter 5 cases that have been filed as
prepackaged meaning the votes in favor of the debtors proposed plan of reorganization
were not gathered prior to filing its voluntary petition.

A prepackaged subchapter 5 case would allow a confirmation hearing to be happening
on about the same day that the Internal Revenue Service is required to answer the
complaint under section 505. A confirmation hearing could be held in which evidence is
heard on a preliminary basis as to the strength of the lawsuit against the IRS. The
timing is what would make the lawsuit a “Core Matter” and central tenant to the Debtor’s
plan of reorganization, removing the likelihood that a Bankruptcy judge would abstain
from hearing the matter if the tax case does not dive too deeply into the tax laws.

Failure to obtain a forbearance agreement from the SBA or other government agency
via the partner bank would potentially PERMANENTLY foreclose any future ability of the
borrower to participate in government lending programs according to the ipso post facto
language of most lending agreements which contain the prohibition against filing a
voluntary bankruptcy petition.

Even if it is a creditor the IRS does not get to vote on a plan of reorganization in any
chapter of bankruptcy including subchapter V.

This is a great question and very timely. The 505 project believes that by bringing
another creditor that is the government into the plan as a voting party via the partner
bank such as on an SBA loan and seeking for the government agency to surface and
assert its offset right under section 533 during its section 505 lawsuit against the IRS,
the non voting party problem is solved because the government can be treated as one
creditor using section 533 (in re: Turner 1996 10 th Circuit).

The IRS does not get to vote on any reorganization plans but it does have the right to
object if it is a creditor.

A consensual plan is a plan in which creditor votes against a plan of reorganization. A
non consensual plan has a creditor who is allowed to vote voting against the
confirmation efforts and proposed plan of a Debtor.

Not every creditor gets to vote on a plan of reorganization. Any creditor can object to
confirmation, but in a “prepackaged” subchapter V case every creditor who is allowed to
vote has voted prior to the filing of the voluntary petition for bankruptcy relief.

It happens all the time.

In a consensual plan under subchapter V The debtor obtains its discharge upon the
effective date of the plan meaning the date that the payments under the plan are first
sent out. In other words at the beginning of the plan. This is a feature that is unique and
special to subchapter V. Please consult an experienced bankruptcy attorney.

Not necessarily.  Insolvency is when the value of a debtors assets are exceeded by its liabilities. If a loan goes into default, even technical default on one missed payment, the borrower is entitled to file bankruptcy to resolve such a default. Consult an experienced bankruptcy attorney.

Yes. So, the outcome of the lawsuit that is material to the plan may prevent the plan
from being granted confirmation in bankruptcy court however if the plan is crafted
properly, the outcome of a lawsuit that might last six years (coincidentally, the IRS has
been given six years to get through its ERC backlog). The dollar amounts at play within
the plan can be left undetermined but percentages can be figured out based on the best
estimates of ultimate outcome of the lawsuit. However, while the lawsuit is pending
deadlines and statutory or statute of limitation issues can be tolled so that rights (such
as appeal rights on an ERC claim) that might be lost in the absence of litigation, do not
expire.