Court Opinion

ID: 4335225
Source: CourtListenerOpinion
Date Created: 2018-11-14 02:08:02.226049+00
Date Added: 2024-06-11T14:47:24.560610
License: Public Domain

123 T.C. No. 21

                UNITED STATES TAX COURT

             CLARA L. PREVO, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 5805-04L.               Filed December 14, 2004.

     On Feb. 23, 2004, R issued to P a Notice of
Determination Concerning Collection Action(s) for the
taxable years 1989, 1990, 1993, 1996, 1998, and 2000.
On Mar. 1, 2004, P filed a bankruptcy petition under
ch. 13 of the Bankruptcy Code. On Mar. 29, 2004, P
filed a petition with the Court challenging R’s notice
of determination. On Mar. 31, 2004, the bankruptcy
court dismissed P’s bankruptcy petition. On May 24,
2004, P filed an amended petition. R filed a motion to
dismiss for lack of jurisdiction in this case on the
ground that the petition was filed in violation of the
automatic stay imposed under 11 U.S.C. sec. 362(a)(8)
(2000).
                                 -2-

          Held: The Court lacks jurisdiction in this case
     on the ground the petition was filed in violation of
     the automatic stay imposed under 11 U.S.C. sec.
     362(a)(8). R’s motion to dismiss for lack of
     jurisdiction will be granted.

     Clara L. Prevo, pro se.

     Brianna Basaraba Taylor, for respondent.

                               OPINION

     GERBER, Chief Judge:   This matter is before the Court on

respondent’s motion to dismiss for lack of jurisdiction.

Respondent’s motion presents an issue of first impression

regarding the application of the automatic stay imposed under 11

U.S.C. section 362(a)(8) (2000) in a collection review proceeding

brought in this Court pursuant to section 6320.1   As discussed in

detail below, we shall grant respondent’s motion to dismiss.

Background

     On February 23, 2004, respondent issued to petitioner a

Notice of Determination Concerning Collection Action(s) for the

taxable years 1989, 1990, 1993, 1996, 1998, and 2000.   The notice

of determination stated in pertinent part:

     1
      Unless otherwise indicated, section references are to
sections of the Internal Revenue Code, as amended.
                                -3-

     Summary of Determination

     After discussion of the Notice of Federal Tax Lien
     filing at conference, verification that all legal and
     procedural requirements were met, review of the
     compliance case file and information submitted by the
     taxpayer, it was determined that the issuance of the
     Notice of Federal Tax Lien Filing was appropriate, and
     the action is sustained. The Lien was filed at the
     time the taxpayer’s offer in compromise was being
     rejected. The Taxpayer’s proposed offer in compromise
     was not an acceptable collection alternative. The
     taxpayer reports her current employment is a short term
     situation, and is unable to fund an offer or an
     installment agreement. The taxpayer’s account was
     previously closed as currently not collectible under
     hardship provisions and should revert to that status.

The record does not include a copy of the notice of Federal tax

lien that is referred to in the notice of determination.

     On March 1, 2004, petitioner filed a voluntary petition for

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

Bankruptcy Court for the Northern District of Georgia.

     On March 29, 2004, petitioner filed with this Court a

petition for lien or levy action challenging respondent’s notice

of determination.2   At the time the petition was filed,

petitioner’s bankruptcy case had not been closed or dismissed,

nor had the bankruptcy court granted or denied petitioner a

discharge.   See 11 U.S.C. sec. 362(c)(2) (2000).

     2
      At the time the petition was filed, petitioner resided in
Austell, Ga. The envelope in which the petition was mailed was
postmarked Mar. 24, 2004.
                                 -4-

     On March 31, 2004, the bankruptcy court dismissed

petitioner’s bankruptcy case.   On May 24, 2004, petitioner filed

an amended petition with the Court.

     On August 4, 2004, respondent filed a motion to dismiss for

lack of jurisdiction.   Respondent contends that the Court lacks

jurisdiction because the petition was filed with the Court in

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

362(a)(8).   On August 18, 2004, petitioner filed a response in

opposition to respondent’s motion to dismiss.

Discussion

     The Tax Court is a court of limited jurisdiction, and we may

exercise our jurisdiction only to the extent authorized by

Congress.    Naftel v. Commissioner, 85 T.C. 527, 529 (1985).   Our

jurisdiction in a collection review proceeding brought pursuant

to section 6320 generally depends upon the issuance of a valid

notice of determination and a timely filed petition.     See Sarrell

v. Commissioner, 117 T.C. 122, 125 (2001); Offiler v.

Commissioner, 114 T.C. 492, 498 (2000).

     This case presents an issue of first impression, whether the

bankruptcy automatic stay under 11 U.S.C. section 362 (2000)

bars the commencement of a proceeding with the Court pursuant to

the collection review procedures established under section 6320.
                                -5-

Before proceeding with our analysis, we briefly review both the

automatic stay provisions and the collection review procedures.

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 the debtor’s 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 (1991).

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

section 362(a).   Significantly, 11 U.S.C. section 362(a)(8)

expressly bars “the commencement or continuation of a proceeding

before the United States Tax Court concerning the debtor.”

Unless relief from the automatic stay is granted by order of the

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

generally remains in effect until the earliest of the closing of

the case, the 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).

     It is worth noting that the Commissioner is authorized,

pursuant to the exception to the automatic stay set forth in 11
                                 -6-

U.S.C. section 362(b)(9), to issue a notice of deficiency to a

taxpayer in bankruptcy.    See Kieu v. Commissioner, 105 T.C. 387,

391 (1995).    Even though, as previously discussed, such a

taxpayer would be barred from filing a petition for

redetermination with this Court so long as the automatic stay

remained in effect, Congress established a procedure to permit

such a taxpayer to invoke the Court’s deficiency jurisdiction

under section 6213(a) after the bankruptcy proceedings are

completed.    Specifically, section 6213(f) provides that the

statutory period for filing a timely petition with the Court

under section 6213(a) is suspended for the period during which

the taxpayer is prohibited by reason of the automatic stay from

filing a petition for redetermination and for 60 days thereafter.

See Olson v. Commissioner, 86 T.C. 1314, 1318-1319 (1986) (and

cases cited therein).    We observe that the benefits of section

6213(f) may apply whether a notice of deficiency is mailed before

or after the filing of a bankruptcy petition.    See McClamma v.

Commissioner, 76 T.C. 754 (1981).

Collection Review Procedures

     Section 6321 imposes a lien in favor of the United States on

all property and rights to property of a person liable for taxes

when a demand for the payment of the person’s taxes has been made

and the person fails to pay those taxes.    Such a lien arises when

an assessment is made.    Sec. 6322.   Section 6323(a) requires the
                                -7-

Secretary to file a notice of Federal tax lien if the lien is to

be valid against any purchaser, holder of a security interest,

mechanic’s lienor, or judgment lien creditor.      Lindsay v.

Commissioner, T.C. Memo. 2001-285, affd. 56 Fed. Appx. 800 (9th

Cir. 2003).   From the taxpayer’s perspective, the filing of such

a lien may have the negative effects of creating a cloud on the

taxpayer’s title to property and impairing the taxpayer’s

creditworthiness.   See, e.g., Magana v. Commissioner, 118 T.C.

488 (2002).

     In the Internal Revenue Service Restructuring and Reform Act

of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 746, Congress

enacted new sections 6320 (pertaining to liens) and 6330

(pertaining to levies) to provide specified protections for

taxpayers in tax collection matters.   Section 6320 provides that

the Secretary shall furnish the person described in section 6321

with written notice of the filing of a notice of lien under

section 6323.   The notice required by section 6320 must be

provided not more than 5 business days after the day of the

filing of the notice of lien.   Sec. 6320(a)(2).    Section 6320

further provides that the person may request administrative

review of the matter (in the form of an Appeals Office hearing)

within 30 days beginning on the day after the 5-day period.

Section 6320(c) provides that the Appeals Office hearing
                               -8-

generally shall be conducted consistent with the procedures set

forth in section 6330(c), (d), and (e).

      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

court within 30 days of the mailing of the notice of

determination.   Sec. 6330(d)(1); Offiler v. Commissioner, 114

T.C. at 498.   Notably, there is no provision analogous to

section 6213(f) in section 6320 or 6330 that tolls the statutory

period for filing a timely petition for lien or levy action for

the period during which the person is prohibited by reason of

the automatic stay from filing such a petition.3

Analysis

      Consistent with the plain language of 11 U.S.C. section

362(a)(8), which expressly bars “the commencement or

continuation of a proceeding before the United States Tax Court

concerning the debtor”, we conclude that the petition for lien

or levy action in this case was filed in violation of the

automatic stay, and, therefore, we lack jurisdiction.    In short,

there is no exception to the automatic stay under 11 U.S.C.

     3
      Sec. 6320 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.
                                 -9-

section 362(b) permitting the commencement of a proceeding in

this Court, nor is there any suggestion in the record that the

bankruptcy court granted petitioner relief from the automatic

stay under 11 U.S.C. section 362(d).     Under the circumstances,

the automatic stay remained in effect until March 31, 2004-–the

date that the bankruptcy court dismissed petitioner’s bankruptcy

case.    See 11 U.S.C. sec. 362(c)(2).

      Unfortunately here, where the petition in bankruptcy was

voluntary, petitioner has fallen victim to a trap for the

unwary.    As the notice of determination was issued to petitioner

on February 23, 2004, petitioner normally would have had 30

days--until March 24, 2004--to file a timely petition for lien

or levy action with the Court.    However, upon the filing of the

bankruptcy petition on March 1, 2004, the automatic stay was

invoked, and petitioner was barred from commencing a proceeding

in this Court.4   Further, the automatic stay remained in effect

until March 31, 2004-–7 days after the 30-day statutory filing

period under sections 6320(c) and 6330(d) expired.    Thus, but

for the provisions of section 11 U.S.C. section 362(a)(8) and

     4
      Had petitioner first filed a petition with this Court and
then filed a bankruptcy petition, the proceeding before this
Court would have been active and then stayed, thereby preserving
petitioner’s ability to contest respondent’s determination.
                                 -10-

the lack of a tolling provision analogous to section 6213(f),

this Court would have jurisdiction over this case.5

     We emphasize and note that Congress did not include in

sections 6320 and 6330 a tolling provision comparable to section

6213(f) that would extend the period for petitioner to file a

petition for lien or levy action with the Court.      Although the

outcome in this case appears harsh, the gap in the collection

review procedures that this case highlights is not one that can

be closed by judicial fiat.   A remedy, if any, must originate

with Congress.   In the end, we are obliged to grant respondent’s

motion to dismiss for lack of jurisdiction.

     To reflect the foregoing,

                                        An order of dismissal for

                                 lack of jurisdiction will be

                                 entered.

    5
      See, however, sec. 6330(d), which provides in part: “If a
court determines that the appeal was to an incorrect court, a
person shall have 30 days after the court determination to file
such appeal with the correct court”. We do not decide herein
whether our determination in this opinion that we lacked
jurisdiction over the petition filed during the pendency of
petitioner’s bankruptcy case means that we are or are not the
“incorrect” court for purposes of the above-quoted flush
language. If we were the “incorrect” court, petitioner would
have 30 days from the date decision is entered in this case to
refile in the “correct” court. That issue, however, is not
currently before the Court and was not briefed by the parties.