Court Opinion

ID: 9651781
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:45:55.59384+00
Date Added: 2024-06-11T13:34:35.197801
License: Public Domain

STOSBERG,
dissenting.
The panel accurately acknowledges that ample authority supports the trial court, but then rejects the plain meaning approach to achieve what it perceives to be the desired result. Nowhere in the thousands if not millions of pages of federal statutes does it say that the IRS should be treated differently when it comes to statutory interpretation. Application of the plain language of the statute does not produce a result demonstrably at odds with the congressional intent as stated by the panel. See United States v. Ron Pair Enters. Inc., 489 U.S. 235, 109 S.Ct. 1026, 1031, 103 L.Ed.2d 290 (1989). Certainly, it is not an “absurd” result as the panel suggests. As noted by Judge Lundin in Nolan, if Congress intended to automatically suspend the three year period during which the taxpayer was a debtor in a prior bankruptcy case, a statement of this intent would be found somewhere in the Code. Nolan v. United States (In re Nolan), 205 B.R. 885, 890 (Bankr.M.D.Tenn.1997).
Further troubling is the effect of the panel’s holding, which will discourage debtors from at least trying to pay their taxes because the chapter 13 route effectively extends the collection period for the IRS, whereas the chapter 7 or non-filing route leaves it alone. The panel’s holding compels debtor’s counsel to advise the client that you can try to pay in a chapter 13 but the collection period for the IRS will be extended. The result effectuated by the panel’s ruling is that those debtors who attempt to pay in a chapter 13 are penalized while those persons who evade their taxes are rewarded. The Bankruptcy Code is designed to protect the honest but unfortunate debtor and not act as a sword for the IRS.
*887The real irony of the panel’s approach is that it ignores the fact that the same statutory scheme that it rejects also protects the IRS by making the tax claim a priority in the chapter 13. Equitable tolling of the three year look back period is the same approach rejected by the United States Supreme Court in United States v. Noland (In re Noland), 517 U.S. 535, 116 S.Ct. 1524, 134 L.Ed.2d 748 (1996). See Nolan, 205 B.R. at 892. See also Smith v. United States, 96 F.3d 800 (6th Cir.1996).
The prospect that debtors will abuse the IRS does not justify ignoring the plain meaning of the statute. Debtors that want to abuse the system rarely propose to pay their creditors. Rather, they use serial filings to evade creditors. Section 105 and other good faith provisions offer plenty of relief to the IRS and other creditors to combat the abusers and that is the approach that the bankruptcy court correctly employed. Protections against debtor misconduct are embedded in the Code. Nolan, 205 B.R. at 891. We adopt the reasoning of Nolan and its forerunner, In re Turner, 182 B.R. 317 (Bankr.N.D.Ala.1995), adhered to on reconsideration, 195 B.R. 476 (Bankr.N.D.Ala.1996). On the basis of the holdings in those cases, I respectfully dissent and would affirm the bankruptcy court.