Opinion
CASE NO. 02-60242
October 15, 2002
ORDER DENYING MOTION TO VACATE AND DENYING MOTION TO DETERMINE TAX LIABILITY
This matter is before the court upon the motion to vacate the July 18, 2002 order sustaining debtors' objection to claim filed by the United States on behalf of the Internal Revenue Service (hereafter "IRS") and the response thereto filed by Kenneth L. Smythe and Susan K. Smythe (hereafter "Debtors") and upon Debtors' motion to determine tax liability and the response thereto of IRS.
I. Facts and Arguments
Debtors commenced their Chapter 13 case on January 22, 2002. On March 19, 2002, IRS filed a proof of claim. On April 26, 2002, Debtors filed an objection to the proof of claim and filed a motion to determine tax liability. The certificate of service attached to both the objection and the motion listed James L. Bickett, Assistant U.S. Attorney, 2 South Main Street, Floor 2, Akron, Ohio 44308, as the only representative of IRS who had been served. However, on April 29, 2002, Debtors filed a supplemental certificate of service listing additional parties on which their counsel had served copies of the objection and motion. Debtors' counsel certified the following parties were served:
Internal Revenue Service Collection Division — Insolvency Group P.O. Box 99183 Cleveland, Ohio 44199
Office of the United States Attorney 1800 Bank One Center 600 Superior Avenue, East Cleveland, Ohio 44114-2600
Attorney General of the United States U.S. Department of Justice Tax Division Civil Trial Section, Northern Region P.O. Box 55, Ben Franklin Station Washington, D.C. 20044
Both the objection and motion were set for hearing on June 26, 2002. Again, Debtors served notice of this hearing on IRS by serving James Bickett, the Internal Revenue Service, and the Attorney General of the United States at the aforementioned addresses. IRS did not respond to either pleading.
On June 26, 2002, the court called the matters for hearing. IRS was not present. The court granted Debtors' objection to claim and requested Debtors' counsel submit an order. An order sustaining Debtors' objection to claim was entered on July 18, 2002 which disallowed the claim of IRS except as to tax year 2001.
On September 12, 2002, IRS filed its motion to vacate the July 18, 2002 order arguing the judgment was void because Debtors' failure to serve IRS according to the service requirements of the Federal Rules of Bankruptcy Procedures deprived the court of jurisdiction over IRS. Specifically, IRS argued Rules 9014 and 7004, read in conjunction, require service on IRS to be effected by mailing a copy of the pleading to the office of the United States attorney for the district in which the action is brought, by mailing a copy of the pleading to the Attorney General of the United States, and by mailing a copy of the pleading to the local IRS office.
Debtors responded by arguing their supplemental certificate of service with additional parties listed demonstrated they had sufficiently complied with the Rules and jurisdiction over IRS had been invoked. As verification of the parties served, Debtors' counsel attached a copy of the postage history of his postage provider. The postage history reflected Debtors' counsel's service of the objection and motion on the additional parties listed in the certificate of service filed April 29, 2002.
IRS then filed a response to Debtors' motion to determine tax liability arguing Debtors' motion should be dismissed. IRS argued if the court denies the motion to vacate filed by IRS, then Debtors' motion to determine tax liability should be denied as moot with respect to all tax years but 2001. Alternatively, if the court grants the motion to vacate filed by IRS, then the court should deny Debtors' motion because it lacks merit as to tax year 2001.
II. Discussion
Debtors have effected good service upon IRS. IRS is correct in its assertion that Federal Rule of Bankruptcy Procedure 9014 treats the allowance of a claim as a contested matter and requires the matter to be served in accordance with Rule 7004. However, the court cannot find fault with Debtors' counsel's service of the objection to claim of IRS. Even if any doubt existed as to the veracity of Debtors' supplemental certificate of service filed April 29, 2002, the filing of Debtors' counsel's postage account history clearly evidences service of both the objection to claim and motion to determine tax liability on the parties IRS argues needed to be served to invoke jurisdiction. A perusal of the stamps.com website indicates there are two ways in which one can obtain postage. One is to input an address and then print both the address and postage directly onto an envelope. The other is to print postage to be used later called netstamps. Debtors' counsel must have used the first service as the court's investigation into the availability of netstamps indicates they did not become available until mid-July 2002. Therefore, Debtors' counsel's certification of service and proof in the form of documentation from stamps.com must be taken as accurate. The motion to vacate filed by IRS is DENIED.
The argument IRS makes that if the court denies its motion to vacate, then this renders the motion to determine tax liability of Debtors moot is with merit. The order sustaining Debtors' objection to claim disallows all claims except those for tax year 2001. This effectively resolves the determination of Debtors' tax liability and moots the motion. Therefore, Debtors' motion to determine tax liability is DENIED. The court does not reach the issue of whether overpayments, if any, for 1995 and 1996 tax years offset Debtors' 2001 federal income tax liability. The objection to the 2001 federal income tax portion of the claim was not sustained.
It is so ordered.