In re Bauman; Bauman

Full title: IN RE BAUMAN; BAUMAN

Court: United States District Court, N.D. Ohio, Eastern Division

Date published: Aug 14, 1979

Nos. B76-35C and B76-230C (N.D. Ohio Aug. 14, 1979)

Opinion

Nos. B76-35C and B76-230C

August 14, 1979

Jurisdiction — Taxes — Sovereign Immunity — Trustee's Claim to Recover

WILLIAMS, Bankruptcy Judge

The bankruptcy courts do not have jurisdiction to hear a trustee's compliant to recover taxes paid by the trustee's filing of a Fiduciary Income Tax Return, but allegedly not due and owing, to the Internal Revenue Service.

The alleged overpayment occurred during the course of the trustee's administration of the estate when the trustee filed a Fiduciary Income Tax Return (Form 1041). The trustee asserted that his claim for the overpayment was a claim "upon which a dividend has been paid" and that therefore, pursuant to In re Madden, CCH Dec. ¶ 65,720, and Section 57(1) of the Bankruptcy Act, the bankruptcy court had summary jurisdiction over the proceeding.

The court noted that the trustee in this instance is not asserting any right under Section 57(1) of the Bankruptcy Act because the taxes the trustee is claiming were "not legally due and owing from the Trustee" were taxes he paid with the filing of his Form 1041 Fiduciary Income Tax Return, and not taxes paid in response to a proof of claim filed by the Internal Revenue Service. Therefore, the trustee's complaint falls within the terms of 28 U.S.C. § 1346(a)(1) which gives only the district courts or the Court of Claims the power to hear tax refund cases — "the principle of sovereign immunity from suit being still intact so far as this action in this court is concerned." In holding that the bankruptcy court did not have jurisdiction to hear the trustee's complaint, the court cited Chrome Plate, Inc. v. District Director of Internal Revenue, CCH Dec. ¶ 66,664 where it was stated that:"[t]he court is not unmindful of the purposes behind the Bankruptcy Act, especially the need and desirability for swift and complete adjudication of all of a bankrupt's debts and claims in a single proceeding. Nevertheless, if there is a clash between the purposes of the Bankruptcy Act and the principle of sovereign immunity, it is the Bankruptcy Act that must yield." See Sec. 57(1) at ¶ 2521.