T.C. Memo. 2005-41

UNITED STATES TAX COURT

CATHERINE BEVERLY, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 10774-03L. Filed March 7, 2005.

P filed a bankruptcy petition. R subsequently

issued to P a Final Notice of Intent to Levy and Notice

of Your Right to Hearing (final notice of intent to

levy) under sec. 6330, I.R.C. After P’s bankruptcy

case was closed, R issued to P a Notice of

Determination Concerning Collection Action(s). P filed

with the Court a Petition for Lien or Levy Action. R

filed a Motion for Summary Judgment, and a supplement

thereto. 

Held: The final notice of intent to levy was

issued to P in violation of the automatic stay imposed

under 11 U.S.C. sec. 362(a) (2000) and was invalid and

of no effect. Held, further, R’s Motion for Summary

Judgment, as supplemented, is denied, and a decision

will be entered that respondent may not proceed with

the proposed collection action.
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1 Unless otherwise indicated, section references are to the

Internal Revenue Code, as amended. Rule references are to the

Tax Court Rules of Practice and Procedure.

Catherine Beverly, pro se.

Karen Baker and Michael W. Bitner, for respondent.

MEMORANDUM OPINION

PANUTHOS, Chief Special Trial Judge: This collection review

case is before the Court on respondent’s Motion for Summary

Judgment, as supplemented, filed pursuant to Rule 121.1 

Summary judgment is intended to expedite litigation and avoid

unnecessary and expensive trials. Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988); Naftel v. Commissioner, 85

T.C. 527 (1985). Summary judgment may be granted with respect to

all or any part of the legal issues in controversy “if the

pleadings, answers to interrogatories, depositions, admissions,

and any other acceptable materials, together with the affidavits,

if any, show that there is no genuine issue as to any material

fact and that a decision may be rendered as a matter of law.” 

Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520

(1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v.

Commissioner, 90 T.C. 753, 754 (1988). The moving party bears

the burden of proving that there is no genuine issue of material

fact, and factual inferences will be read in a manner most

favorable to the party opposing summary judgment. Dahlstrom v.
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2 The record establishes and/or the parties do not dispute

the following.

Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner,

79 T.C. 340, 344 (1982).

Based upon our review of the record, we are satisfied that

there is no genuine issue as to any material fact and that

judgment may be rendered as a matter of law. However, as

discussed in detail below, we conclude that the law does not

support respondent’s position. We hold that the final notice of

intent to levy was issued to petitioner in violation of the

automatic stay arising from her case in bankruptcy and therefore

is invalid. Accordingly, we shall deny respondent’s Motion for

Summary Judgment, as supplemented, and we shall enter a decision

that respondent may not proceed with the proposed collection

action.

Background2

On November 2, 2001, petitioner filed a voluntary petition

for relief under chapter 13 of the Bankruptcy Code with the U.S.

Bankruptcy Court for the Southern District of Illinois. On

November 26, 2001, respondent issued to petitioner a Final Notice

of Intent to Levy and Notice of Your Right to a Hearing Under

Section 6330 (final notice of intent to levy) with regard to her

unpaid Federal income taxes for 1985 to 1988 and 1994 and 1995. 

On November 27, 2001, the bankruptcy court issued an order
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3 The petition arrived at the Court in an envelope bearing

a timely U.S. Postal Service postmark dated July 1, 2003. See

sec. 7502(a).

dismissing petitioner’s bankruptcy case due to her failure to

file required schedules. On December 6, 2001, the bankruptcy

court entered an order closing petitioner’s case.

In the meantime, on December 5, 2001, petitioner filed a

second bankruptcy petition.

On December 19, 2001, petitioner filed with respondent a

Form 12153, Request for a Collection Due Process Hearing,

challenging the proposed levy.

On May 17, 2002, the bankruptcy court dismissed petitioner’s

second bankruptcy case.

On June 5, 2003, respondent issued to petitioner a Notice of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330 (notice of determination) which stated that

respondent intended to proceed with the proposed levy. On July

7, 2003, petitioner filed with the Court a Petition for Lien or

Levy Action challenging respondent’s notice of determination.3

At the time the petition was filed, petitioner resided in

Collinsville, Illinois.

As indicated, respondent filed a Motion for Summary

Judgment. Respondent contends that the Court should sustain the

notice of determination on the ground that the Appeals officer

did not abuse her discretion in rejecting petitioner’s offer in
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4 Upon questioning by the Court, respondent was hesitant to

acknowledge that the final notice of intent to levy violated the

automatic stay. In a footnote to his supplement to the motion

for summary judgment, respondent states that “it is not clear

(continued...)

compromise-–the sole issue that petitioner purportedly raised

during the administrative proceedings-–because petitioner was not

current in filing her tax returns at that time. 

Respondent’s motion was called for hearing at the Court’s

motions session held in Washington, D.C. During the hearing,

counsel for respondent informed the Court that respondent had

recently discovered that the final notice of intent to levy was

issued to petitioner while petitioner’s first bankruptcy case

remained open. The Court subsequently directed respondent to

file a supplement to his motion addressing the question whether

the final notice of intent to levy was issued to petitioner in

violation of the automatic stay imposed under 11 U.S.C. section

362(a)(2000). Respondent filed a supplement, as directed, and

the matter was called for further hearing at the Court’s motions

session. Respondent maintains that while the issuance of the

final notice of intent to levy may have violated the automatic

stay, petitioner should nevertheless be estopped from arguing

that the final notice of intent to levy was issued in violation

of the automatic stay because she failed to inform respondent

during the administrative proceedings that she had filed a

bankruptcy petition.4
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4(...continued)

whether the providing of a notice of right to a hearing under

section 6330 is an ‘act to collect’ in violation of the automatic 

stay”. Respondent further states that the final notice of intent

to levy required under sec. 6331(a) is in the same document as

the notice of a right to hearing. Respondent concludes in the

footnote that “Arguably, in contrast to the notice of intent to

levy and the notice of levy, the mere notice of a right to a prelevy hearing does not violate the stay.” 

 Discussion

Section 6331(a) provides that, if any person liable to pay

any tax neglects or refuses to pay such tax within 10 days after

notice and demand for payment, the Secretary is authorized to

collect such tax by levy upon property belonging to the person. 

Section 6331(d) provides that the Secretary is obliged to provide

the person with notice, including notice of the administrative

appeals available to the person, before proceeding with

collection by levy on the person’s property.

Section 6330 generally provides that the Commissioner cannot

proceed with the collection of taxes by way of a levy on a

person’s property until the person has been given notice of, and

the opportunity for, an administrative review of the matter (in

the form of an Appeals Office hearing), and if dissatisfied, with

judicial review of the administrative determination.

Section 6330(d) provides for judicial review of the

administrative determination in the Tax Court or a Federal

District Court, as may be appropriate. To obtain judicial

review, the person must file a petition with the appropriate
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5 Sec. 6330 is effective with respect to collection actions

initiated more than 180 days after July 22, 1998 (Jan. 19, 1999). 

See Internal Revenue Service Restructuring and Reform Act of

1998, Pub. L. 105-206, sec. 3401(d), 112 Stat. 750.

court within 30 days of the mailing of the notice of

determination. Sec. 6330(d)(1).5 

There is no dispute in this case that respondent issued to

petitioner a final notice of intent to levy after petitioner

filed her bankruptcy petition and while the automatic stay

remained in effect. Under the circumstances, we must evaluate

respondent’s position in light of the provisions governing the

automatic stay.

 Title 11 of the United States Code provides uniform

procedures designed to promote the effective rehabilitation of

the bankrupt debtor and, when necessary, the equitable

distribution of his or her assets. See H. Rept. 95-595, at 340

(1977). One key to achieving these aims is the automatic stay

which generally operates to temporarily bar actions against or

concerning the debtor or property of the debtor or the bankruptcy

estate. See Allison v. Commissioner, 97 T.C. 544, 545 (1991);

Halpern v. Commissioner, 96 T.C. 895, 897-898 (1991).

The automatic stay provisions are set forth in 11 U.S.C. 

section 362(a) (2000), which provides in pertinent part:

(a) Except as provided in subsection (b) of this

section, a petition filed under section 301, 302, or

303 of this title, * * * operates as a stay, applicable

to all entities, of --
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(1) the commencement or continuation, including

the issuance or employment of process, of a judicial,

administrative, or other action or proceeding against

the debtor that was or could have been commenced before

the commencement of the case under this title, or to

recover a claim against the debtor that arose before

the commencement of the case under this title;

* * * * * * *

(3) any act to obtain possession of property of

the estate or of property from the estate or to

exercise control over property of the estate;

* * * * * * *

(6) any act to collect, assess, or recover a claim

against the debtor that arose before the commencement

of the case under this title; * * *

Unless relief from the automatic stay is granted by order of

the bankruptcy court, see 11 U.S.C. sec. 362(d) (2000), the

automatic stay generally remains in effect until the earliest of

the closing of the case, dismissal of the case, or the grant or

denial of a discharge, 11 U.S.C. sec. 362(c)(2); see Allison v.

Commissioner, supra at 545; Smith v. Commissioner, 96 T.C. 10, 14

(1991); Neilson v. Commissioner, 94 T.C. 1, 8 (1990).

Analysis

As previously discussed, the automatic stay under 11 U.S.C.

section 362(a)(1) bars “the commencement or continuation,

including the issuance or employment of process, of a judicial,

administrative, or other action or proceeding against the debtor

that was or could have been commenced before the commencement of

the case under this title”. Based upon the plain language of 11
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U.S.C. section 362(a)(1), we conclude that respondent violated

the automatic stay when he issued to petitioner the final notice

of intent to levy dated November 26, 2001. In particular, there

is no dispute in this case that respondent could have issued a

final notice of intent to levy to petitioner regarding her unpaid

income taxes for 1985 to 1988, and 1994 and 1995 before

petitioner filed her bankruptcy petition. Moreover, we are

satisfied that the issuance of the final notice of intent to levy

constituted the commencement of an administrative proceeding

against petitioner within the meaning of 11 U.S.C. section

362(a)(1). See, e.g., Smith v. Commissioner, 124 T.C. __ (2005)

(holding that a notice of determination issued under section 6330

to a taxpayer/debtor in bankruptcy constituted the continuation

of an administrative collection action against the debtor within

the meaning of 11 U.S.C. section 362(a)(1)). In particular, when

the Commissioner issues to a person a final notice of intent to

levy, that person is entitled to invoke the administrative and

judicial procedures prescribed under section 6330. Id. at __. 

Indeed, should such person fail to timely request an

administrative hearing, the Commissioner generally is free to

proceed with the proposed levy. Consistent with the foregoing,

we conclude that 11 U.S.C. section 362(a)(1) 
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6 Respondent does not contend that the final notice of

intent to levy qualified under any of the exceptions to the

automatic stay prescribed in 11 U.S.C. sec. 362(b)(2000). 

barred respondent from issuing to petitioner the final notice of

intent to levy dated November 26, 2001.6

Our holding that the issuance to petitioner of the final

notice of intent to levy violated the automatic stay is

consistent with both bankruptcy case law and respondent’s

administrative guidance. See In re Parker, 279 Bankr. 596,

602-603 (Bankr. S.D. Ala. 2002) (The Commissioner conceded, and

the bankruptcy court held, that the issuance of a final notice of

intent to levy under section 6330 violated the automatic stay.);

In re Covington, 256 Bankr. 463, 465-466 (Bankr. D.S.C. 2000)

(The bankruptcy court held that a final notice of intent to levy

did not constitute a notice and demand for payment within the

meaning of 11 U.S.C. section 362(b)(9)(D)) and that such notice

was issued to the debtor in violation of the stay); see also

Chief Counsel Adv. 00-18-005 (May 5, 2000) (A Final Notice of

Intent to Levy issued to a person who had filed a bankruptcy

petition violated the automatic stay and was void).

At this point, a brief comment regarding the Court’s

jurisdiction is warranted. We recently held in Smith v.

Commissioner, 124 T.C. __, that a notice of determination under

section 6330 issued to a taxpayer/debtor while the automatic stay

was in effect was invalid, and we dismissed the case for lack of
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jurisdiction on that ground. The facts in the present case are

distinguishable from those in Smith v. Commissioner, 124 T.C. __. 

Specifically, the notice of determination upon which this case is

based was issued to petitioner well after the automatic stay was

terminated. Because the petition was timely filed in response to

a notice of determination that is valid on its face, we conclude

that petitioner properly invoked our jurisdiction under section

6330. See Sarrell v. Commissioner, 117 T.C. 122, 125 (2001);

Moorhous v. Commissioner, 116 T.C. 263, 269 (2001); Offiler v.

Commissioner, 114 T.C. 492, 498 (2000); see also Rule 330(b). 

 Respondent maintains that petitioner should be estopped from

asserting that the final notice of intent to levy violated the

automatic stay because she failed to inform respondent during the

administrative proceedings that she had filed a bankruptcy

petition. Respondent cites Matthews v. Rosene, 739 F.2d 249 (7th

Cir. 1984), for the proposition that a debtor may be barred by

the equitable doctrine of laches from challenging an action that

arguably violated the automatic stay.

We are not persuaded by respondent’s argument. The record

suggests that petitioner was acting pro se throughout the

administrative proceedings. Without more, we presume that

petitioner acted in good faith and that she was unaware that

respondent’s issuance of the final notice of intent to levy

violated the automatic stay. Respondent, on the other hand, had
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previously issued administrative guidance in the form of a Chief

Counsel Advisory (cited above) concluding that the issuance of a

final notice of intent to levy to a person with an open

bankruptcy case would violate the automatic stay. Considering

respondent’s administrative guidance on this specific point, we

disagree with respondent that petitioner should be estopped. 

Considering all the circumstances, we decline to apply an

equitable principle to bar consideration of the validity of the

final notice of intent to levy.

We recently noted that collection activity undertaken in

violation of the automatic stay generally is considered void or

invalid. See Smith v. Commissioner, 124 T.C. __ (2005) (citing

9B Am. Jur. 2d, Bankruptcy, sec. 1756 (1999)). The U.S. Court of

Appeals for the Seventh Circuit, the court to which an appeal in

this case would lie, adheres to this view. See Middle Tenn. News

Co. v. Charnel of Cincinnati, Inc., 250 F.3d 1077, 1082 (7th Cir.

2001).

In sum, we conclude that the final notice of intent to levy

was issued to petitioner in violation of the automatic stay, and

therefore, it was invalid. It follows that respondent abused his 
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discretion by concluding in the notice of determination that the

proposed levy should proceed. 

To reflect the foregoing, 

An Order denying respondent’s 

Motion for Summary Judgment, as 

supplemented, and a decision will 

be entered for petitioner.