Opinion
Case No. 06-11088.
December 15, 2006
DECISION AND ORDER
In this Chapter 13 case, the United States, on behalf of the Internal Revenue Service, (hereafter "IRS") has filed a Motion to Dismiss debtor's case pursuant to 11 USC § 1307(c) and (e), and § 1308. In its motion, the IRS specifies that the grounds for its motion is that debtor has failed to file federal income tax returns for all taxable periods ending during the four-year period prior to the commencement of this case.
The matter came on for hearing at which time the debtor testified, as did Ms. Barbara Boenker on behalf of the IRS. Documentary evidence was presented as well.
It was admitted that the debtor had failed to file federal tax returns prior the § 341 Meeting of Creditors since the year 2000. Debtor testified that the returns were not filed because he mistakenly believed that his wife was filing returns each year. Debtor is a self-employed real estate agent. He testified further that he had prepared and filed returns for years 2000 through and including 2005 prior to the hearing. Debtor testified that he believed that he filed returns for the years 1996 and 1997, but that he had but minimal income in 1998 and 1999 and therefore did not file returns for those years. He testified that he had received a notice from the IRS in the summer of 2006 informing him that he had not filed returns for a couple of years. He says that he then telephoned IRS and this led to his filing of returns. He denied that he had received any notices from IRS prior to 2006.
Ms. Boenker, a bankruptcy specialist with IRS, testified that debtor had filed no federal tax returns from 1996 through and including 2005. She testified that during that period the IRS had sent a number of notices to the debtor and made efforts at telephone communication with no response.
From the evidence presented to the Court, we find the following facts. Debtor filed no federal tax returns 1996 through and including 2005, until he recently filed returns for 2000 through 2005. It was admitted by debtor that he did not file returns for the years 2000 through 2005 prior to the 341 Meeting. While he testified that he filed returns for 1996 and 1997, the evidence was that IRS has no record of having received any returns for the years 1996 to 1999 inclusive. Debtor presented no evidence sufficient to rebut the presumption that returns were not sent for those years, despite his testimony to the contrary. See Surowka v. U.S., 909 F.2d 148 (6th Cir. 1990).
The pertinent sections of the Bankruptcy Code are the following:
" 11 U.S.C. § 1307 Conversion or Dismissal"
***
(e) Upon the failure of the debtor to file a tax return under section 1308, on request of a party in interest or the United States trustee and after notice and a hearing, the court shall dismiss a case or convert a case under this chapter to a case under Chapter 7 of this title, whichever is in the best interest of the creditors and estate.
***
and
" 11 U.S.C. § 1308 Filing of Pre-Petition Tax Returns"
(a) Not later than the day before the date on which the meeting of the creditors is first scheduled to be held under section 341(a), if the debtor was required to file a tax return under applicable nonbankruptcy law, the debtor shall file with appropriate tax authorities all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition.
***
There is no question as far as the admitted facts are concerned that debtor has failed to comply with the requirements of the statute, and that he failed to file required tax returns prior to the § 341 Meeting. Section 1308(e) then mandates that the court dismiss or convert the case to a Chapter 7. The court can perceive no benefit to a conversion to Chapter 7, and therefore the motion of the IRS to dismiss the case is granted.
While debtor argues that it is his intention to give up his home, and to make full payment to IRS if he is allowed to continue his Chapter 13 case, the circumstances here are so egregious, and the statute so clear, that the Court must dismiss the case.
SO ORDERED.
IT IS SO ORDERED.