Court Opinion

ID: 2654501
Source: CourtListenerOpinion
Date Created: 2014-02-26 01:01:31.416771+00
Date Added: 2024-06-11T09:11:45.289132
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              FEB 25 2014

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

STUART A. GROSS,                                 No. 12-72279

              Petitioner - Appellant,            Tax Ct. No. 26902-07

  v.
                                                 MEMORANDUM*
COMMISSIONER OF INTERNAL
REVENUE,

              Respondent - Appellee.

                           Appeal from a Decision of the
                             United States Tax Court

                          Submitted February 14, 2014**
                            San Francisco, California

Before: CALLAHAN and M. SMITH, Circuit Judges, and KORMAN, Senior
District Judge.***

       Appellant Stuart A. Gross appeals from a decision of the tax court, holding

that Appellant’s interest in an ERISA-qualified pension plan is subject to levy by

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
        ***
             The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for the Eastern District of New York, sitting by designation.
the IRS. Because the parties are familiar with the facts and procedural history of

this case, we repeat only those facts necessary to resolve the issues raised on

appeal. We affirm.

      On October 16, 2005, Appellant filed a petition under Chapter 7 of the

Bankruptcy Code. Appellant listed his interest in an ERISA-qualified pension plan

on Schedule B of his bankruptcy petition and explained: “This is an ERISA

Qualified Pension Plan which is not property of the estate but in an abundance of

caution has been listed herein and exempted.” Appellant also listed the ERISA plan

on Schedule C, again explaining: “This is an ERISA Qualified Pension Plan which

is not property of the estate but in an abundance of caution has been listed herein

and exempted.”

      At the time of Appellant’s bankruptcy petition, he owed federal income

taxes totaling $270,041.15. When a person owes tax liabilities, a lien automatically

attaches to the taxpayer’s property in favor of the IRS, under I.R.C. § 6321. The

IRS need not release a valid tax lien when the underlying tax debt is discharged in

bankruptcy. Isom v. United States (In re Isom), 901 F.2d 744, 745 (9th Cir. 1990).

Nonetheless, with regard to assets that are part of the bankruptcy estate but exempt

from the bankruptcy proceedings, the Bankruptcy Code provides that such property

“is not liable during or after the case for any debt of the debtor that arose . . . before

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the commencement of the case, except [inter alia] . . . [a debt secured by] a tax

lien, notice of which is properly filed [under I.R.C. § 6323].” 11 U.S.C. § 522(c).

Unlike liens on exempt assets, liens on prepetition assets that are not included in

the bankruptcy estate (i.e., excluded property) are not affected by the bankruptcy

proceeding. Rains v. Flinn (In re Rains), 428 F.3d 893, 905–06 (9th Cir. 2005).

         The IRS maintains a valid lien on Appellant’s interest in his ERISA-

qualified pension plan. In Patterson v. Shumate, 504 U.S. 753, 759–60 (1992), the

Supreme Court held that an ERISA plan is properly excluded from a bankruptcy

estate under 11 U.S.C. § 541(c)(2). And, here, Gross’ Chapter 7 schedules

explicitly state that his ERISA plan is not part of the estate. Although the schedules

go on to suggest that the ERISA plan might be “exempted,” any ambiguity in a

bankruptcy schedule is construed against the debtor. Seror v. Kahan (In re Kahan),

28 F.3d 79, 82 (9th Cir. 1994) (citing Hyman v. Plotkin (In re Hyman), 967 F.2d

1316, 1319 (9th Cir. 1992)). Because Gross’ ERISA plan was not part of Gross’

Chapter 7 estate, the bankruptcy proceedings did not affect the IRS’ Section 6321

lien. Accordingly, the tax court properly determined that the Section 6321 lien

remains attached to Gross’ interest in the ERISA plan, and the IRS may levy this

asset.

         AFFIRMED.

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