Opinion
12485-20L
04-08-2022
LEO BLAS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Cary Douglas Pugh Judge
This collection case currently is set for trial at the Court's June 6, 2022, Anchorage, Alaska remote trial session. On September 29, 2020, respondent issued a notice of determination sustaining a notice of intent to levy a summarily assessed deficiency for tax year 2014 for the balance petitioner reported as due on his 2014 Form 1040, U.S. Individual Income Tax Return. Petitioner petitioned the Court under section 6330(d).
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Petitioner also has a deficiency case at docket No. 1031-17, set for trial at the Court's June 6, 2022, Anchorage, Alaska remote trial session.
On March 11, 2022, petitioner filed a Motion to Dismiss, primarily asserting that the case should be "close[d] . . . on ground of duplication because of an identical claim filed by the [Internal Revenue Service (IRS)] in bankruptcy on 7/13/21" and that "[the IRS] accepted a settlement payment of $2, 198.75 from the bankruptcy trustee on 9/22/2021 that was not reported to this court." His motion refers to a proceeding in the United States Bankruptcy Court for the District of Alaska (bankruptcy court) that he commenced on November 30, 2017. The bankruptcy court discharged his debt on May 31, 2019.
Petitioner filed his bankruptcy petition under 11 U.S.C. Chapter 13, but his case was converted to chapter 7 on February 13, 2019.
In Wagner v. Commissioner, 118 T.C. 330 (2002), we held that a collection case may be dismissed without prejudice upon motion by the taxpayer. If we granted a Wagner motion and dismissed this case without prejudice, respondent could proceed with collection of the unpaid liability due from petitioner for the year in issue. Id. at 334 ("[The Commissioner] is not prejudiced in maintaining the subject collection action against [the taxpayers] as if the instant proceeding had never been commenced."). Respondent does not object to a dismissal that would allow him to proceed with collection. On the basis of petitioner's motion and a subsequent conference with the parties, we believe that petitioner did not intend to move for such a dismissal but rather seeks dismissal that would bar further collection. And to that extent respondent does object to petitioner's motion.
First, respondent correctly observes that the IRS' proof of claim in Mr. Blas' bankruptcy case in not "an identical claim" to this collection case and the Court has jurisdiction under section 6330(d) to review respondent's notice of determination.
Second, respondent states that the IRS did not agree to settle petitioner's unpaid 2014 Federal income tax liabilities. Again, respondent is correct that the bankruptcy court's discharge order did not discharge petitioner's 2014 tax debt. This is because the IRS' claim in bankruptcy was one for which a required return was "due, including extensions, after three years before the date of the filing of the [bankruptcy] petition"; petitioner's 2014 return was due on April 15, 2015, which is after three years before November 30, 2017 (the date of the filing of the bankruptcy petition). See 11 U.S.C. §§ 523(a)(1)(A), 507(a)(8)(1)(A); see also Breland v. Commissioner, 152 T.C. 156 (2019). The notice of determination flagged this limitation on the effect of petitioner's bankruptcy. Under "Issues You Raised", the notice of determination listed "Bankruptcy" and noted that "[t]axes are not dischargeable when bankruptcy is filed within three years from the due date of tax return including extension. . . . [t]herefore, tax period 2014 met this exception [to discharge] rule."
As regards the effect of the payment of $2, 198.75 that the IRS received in Mr. Blas's bankruptcy proceeding, respondent confirms that petitioner's outstanding balance from the amount he reported as due on his 2014 Form 1040 has been reduced to reflect this payment. But that partial payment does not require us to dismiss the collection action as we must determine whether respondent may pursue collection for any unpaid remainder.
We conclude for these reasons that petitioner has not stated adequate grounds for dismissing this case with prejudice.
Upon due consideration, it is hereby
ORDERED that petitioner's Motion to Dismiss, filed March 11, 2022, is denied. This case remains set for trial at the Court's June 6, 2022, Anchorage, Alaska remote trial session.