Opinion
19992-22L
10-11-2023
GREGORY K. CROWELL BANKRUPTCY ESTATE 17-13624, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
ADAM B. LANDY SPECIAL TRIAL JUDGE
Pending before the Court is the Commissioner's Motion to Dismiss for Lack of Jurisdiction, filed October 11, 2022. The Commissioner seeks to have this case dismissed because Gregory K. Crowell (Mr. Crowell), as debtor and not as debtor in possession or trustee, filed the Petition disputing the Notice of Determination (Notice), and thus, Mr. Crowell is not the proper party to initiate this case pursuant to Rule 60.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
On October 10, 2017, Mr. Crowell filed a Chapter 11 voluntary bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of Ohio (Cincinnati). This filing created the Gregory K. Crowell Bankruptcy Estate (the "Bankruptcy Estate"), pursuant to 11 U.S.C. § 541. On October 17, 2017, Douglas N. Hawkins (Mr. Hawkins) filed a Notice of Appearance and Request for Notice of the United States Trustee, on behalf of the United States Trustee for Region 9 (the "U.S. Trustee"), pursuant to 11 U.S.C. § 1104.
On July 13, 2018, the Bankruptcy Court entered an Order confirming the First Amended Combined Disclosure Statement and Plan of Liquidation (the "Plan"). Pursuant to the terms of the Plan, the Crowell Liquidating Trust (the "Trust") was established on the terms set forth in the Crowell Liquidating Trust Agreement dated July 13, 2018. The Trust Agreement appointed Thomas H. Bergman (Mr. Bergman) to serve as the Trustee of the Trust.
Although the Trust Agreement required Mr. Bergman to file all necessary tax returns, it is unclear who filed the 2018 Form 1041, U.S. Income Tax Return for Estates and Trusts (Form 1041) and when the return was filed. After examining the Bankruptcy Estate's Form 1041, the Internal Revenue Service (IRS) determined that there were insufficient estimated tax payments and withholdings for the 2018 tax year. In response to the liability due, the IRS mailed to the Bankruptcy Estate Letter 3172, Notice of Federal Tax Lien and Your Right to a Hearing Under IRC 6320 on April 21, 2022. On behalf of the Bankruptcy Estate, Mr. Crowell requested a collection due process (CDP) hearing. During the administrative hearing, the IRS Independent Office of Appeals (Appeals) determined that the Bankruptcy Estate was unable to challenge the underlying liability because it failed to file an amended tax return, and the Bankruptcy Estate did not qualify for a lien withdrawal pursuant to section 6323 as a collection alternative. On August 12, 2022, the IRS sent by certified mail the Notice to the "Gregory K. Crowell Bankruptcy Estate" sustaining the filing of the Notice of Federal Tax Lien.
Appeals did determine that the Bankruptcy Estate qualified for currently not collectible status as a collection alternative.
On September 12, 2022, Mr. Crowell petitioned this Court disputing the Notice. In the Petition, Mr. Crowell listed the petitioner as "Gregory K. Crowell Bankruptcy Estate 17-13624." The Petition was filed by "Gregory K. Crowell, Trustee." In his Motion, the Commissioner contends that Mr. Crowell does not have the legal capacity to file a petition with this Court contesting the tax liability for the Bankruptcy Estate because he is neither the trustee nor the debtor-in-possession of the Bankruptcy Estate. The Commissioner suggests that Mr. Bergman, the Plan Trustee, may have the capacity to sign a petition and bring suit in this Court on behalf of the Bankruptcy Estate.
According to exhibits attached to the Commissioner's Motion, Mr. Bergman was discharged as the Chapter 11 trustee. Specifically, on December 21, 2018, the Bankruptcy Court entered an order granting a motion to close the bankruptcy case. This order forever discharged and released Mr. Bergman from all powers, duties, and responsibilities under the Trust, the Trust Agreement, and the Plan. Likewise, it appears that Mr. Hawkins was discharged as the U.S. Trustee of the Bankruptcy Estate on or after the Plan confirmation. Specifically, on March 1, 2019, after determining that the Bankruptcy Estate had been fully administered, the Bankruptcy Court discharged the trustee and closed the Bankruptcy Estate.
Accordingly, the Court seeks the parties' views as to the following questions:
1. When was the Bankruptcy Estate's 2018 Form 1041 filed?
2. Who filed Form 1041 on behalf of the Bankruptcy Estate?
3. After the Plan was confirmed on or around July 13, 2018, and then, the bankruptcy case was closed on or around March 1, 2019, who - Mr. Bergman, Mr.
Hawkins, or Mr. Crowell - became the proper party to defend, initiate, and prosecute subsequent lawsuits on behalf of the Bankruptcy Estate, and what is the legal authority for this right? Does this power remain with Mr. Bergman or Mr. Hawkins who have been presumably discharged, or did the power revert back to Mr. Crowell?
4. Are any circumstances present - factual or legal - post bankruptcy discharge and case closing which would allow Mr. Crowell to return to the position of debtor-in-possession?
Attached as Exhibit A to the Commissioner's Motion is a copy of the bankruptcy docket record which states that Gregory K. Crowell is the debtor in possession.
The premises considered, it is
ORDERED that, on or before November 9, 2023, the parties shall file with the Court a joint written report (or separate reports, if more expedient) responding to the questions posed herein.