Barbara Drake v. Commissioner

123 T.C. No. 20

• Court: United States Tax Court
• Decided: December 14, 2004
• Docket: 4126-04
• Status: Unknown

Opinion

123 T.C. No. 20

UNITED STATES TAX COURT

BARBARA DRAKE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 4126-04. Filed December 14, 2004.

On Sept. 30, 2003, P filed a bankruptcy petition under ch. 13 of the Bankruptcy Code. On Jan. 29, 2004, R issued to P a notice of determination disallowing her claims for relief from joint and several liability under sec. 6015, I.R.C., for the taxable years 1991, 1992, 1994, 1995, and 1997. On Mar. 8, 2004, P filed a petition with the Court challenging R’s notice of determination. 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.

Timothy J. Burke, for petitioner.

Louise R. Forbes and David Abernathy, for respondent.

OPINION

GERBER, Chief Judge: This case was assigned to Chief

Special Trial Judge Peter J. Panuthos, pursuant to the provisions

of section 7443A(b)(5) and Rules 180, 181, and 183.1 The Court

agrees with and adopts the opinion of the Special Trial Judge,

which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

PANUTHOS, Chief Special Trial 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: whether the automatic stay imposed under 11 U.S.C.

section 362(a)(8) (2000) bars the filing of a petition with this

Court in a so-called stand-alone proceeding brought pursuant to

section 6015. As discussed in detail below, we shall grant

respondent’s motion to dismiss.

1 Unless otherwise indicated, section references are to sections of the Internal Revenue Code, as amended, and Rule references are to the Tax Court Rules of Practice and Procedure. - 3 -

Background

On September 30, 2003, petitioner filed a voluntary petition

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

Bankruptcy Court for the District of Massachusetts.

On January 29, 2004, respondent issued to petitioner a

notice of determination disallowing her claim for relief under

section 6015 for the taxable years 1991, 1992, 1994, 1995, and

1997.

On March 8, 2004, petitioner filed with the Court a Petition

for Determination for Relief From Joint and Several Liability

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).

In response to the petition, respondent filed a motion to

dismiss. Respondent contends that the Court lacks jurisdiction

because the petition was filed in violation of the automatic stay

imposed under 11 U.S.C. sec. 362(a)(8). On May 3, 2004,

petitioner filed an objection to respondent’s motion to dismiss.

On June 3, 2004, respondent filed a response to petitioner’s

objection.

2 At the time the petition was filed, petitioner resided in South Yarmouth, Mass. - 4 -

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

session held in Washington, D.C., on July 14, 2004, and for

further hearing at the Court’s motions session held in

Washington, D.C., on September 15, 2004. Counsel for respondent

appeared at the hearings and offered argument in support of

respondent’s motion to dismiss. During the latter hearing,

counsel for respondent informed the Court that petitioner’s

bankruptcy case had been converted to a chapter 7 proceeding on

September 2, 2004. Although there was no appearance by or on

behalf of petitioner at the hearing, petitioner filed with the

Court a written statement pursuant to Rule 50(c) and a supplement

thereto.

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).

Before proceeding with our analysis, we review the scope of our

jurisdiction over claims for relief under section 6015 and the

provisions that define the automatic stay.

Section 6015

Section 6013(d)(3) provides that if a husband and wife file

a joint Federal income tax return, “the tax shall be computed on

the aggregate income and the liability with respect to the tax

shall be joint and several.” However, section 6015(a) provides - 5 -

that, notwithstanding section 6013(d)(3), an individual who has

made a joint return may elect to seek relief from joint and

several liability on that return. For a detailed discussion of

the legislative history of section 6015 (and its predecessor,

section 6013), see Cheshire v. Commissioner, 115 T.C. 183, 188-

189 (2000), affd. 282 F.3d 326 (5th Cir. 2002).

Congress vested the Court with jurisdiction to review a

taxpayer’s election to claim relief from joint and several

liability on a joint return under specified circumstances. See

King v. Commissioner, 115 T.C. 118, 121-122 (2000); Corson v.

Commissioner, 114 T.C. 354, 363-364 (2000). A taxpayer may seek

relief from joint and several liability on a joint return by

raising the matter as an affirmative defense in a petition for

redetermination invoking the Court’s deficiency jurisdiction

under section 6213(a). See Butler v. Commissioner, 114 T.C. 276,

287-288 (2000). In addition, a taxpayer may file a so-called

stand-alone petition seeking relief from joint and several

liability on a joint return where the Commissioner has issued a

final determination denying the taxpayer’s claim for such relief

or the Commissioner has failed to rule on the taxpayer’s claim

within 6 months of its filing. See sec. 6015(e)(1); Mora v.

Commissioner, 117 T.C. 279 (2001); Fernandez v. Commissioner, 114

T.C. 324 (2000). Finally, a taxpayer may request relief from

joint and several liability on a joint return in a petition for - 6 -

review of a lien or levy action. See secs. 6320(c),

6330(c)(2)(A)(i).

The petition in this case was filed as a stand-alone

petition in response to respondent’s notice of determination

dated January 29, 2004. Although petitioner filed her petition

within 90 days of the mailing of the notice of determination, we

must determine whether the filing of that petition was barred by

the bankruptcy automatic stay.

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 (1991).

Actions which are subject to the automatic stay are set

forth in 11 U.S.C. section 362(a), 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 -- - 7 -

(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;

In addition, 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.”

Actions which are excepted from the automatic stay are set

forth in 11 U.S.C. section 362(b) (2000), which provides in

pertinent part:

(b) The filing of a petition under section 301, 302, or 303 of this title, * * * does not operate as a stay--

* * * * * * *

(9) under subsection (a), of -- (A) an audit by a governmental unit to determine tax liability; (B) the issuance to the debtor by a governmental unit of a notice of tax deficiency; (C) a demand for tax returns; or (D) the making of an assessment for any tax and issuance of a notice and demand for payment of such an assessment * * *.

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, the dismissal of the case, or the grant

or denial of a discharge, 11 U.S.C. sec. 362(c)(2); see Allison - 8 -

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

14 (1991).

It is worth noting that 11 U.S.C. section 362(b)(9)(B)

excepts from the automatic stay the issuance of a notice of

deficiency to the taxpayer/debtor under section 6213(a). 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, see 11 U.S.C. sec. 362(a)(8),

Congress established a procedure to permit such a taxpayer to

invoke the Court’s deficiency jurisdiction under section 6213(a)

after the automatic stay is no longer in effect. Specifically,

section 6213(f) provides that the 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). We observe that the benefits of section

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

taxpayer before or after the filing of a bankruptcy petition.

See McClamma v. Commissioner, 76 T.C. 754 (1981).

We also observe, however, that there is no provision

analogous to section 6213(f) in section 6015 that tolls the

statutory period for filing a timely stand-alone petition for the - 9 -

period during which the person is prohibited by reason of the

automatic stay from filing such a petition. Nor is there any

cross-reference in section 6015 to the procedures set forth in

section 6213.3 On the other hand, if the taxpayer raises a

section 6015 claim as an affirmative defense in a petition for

under section 6213(a), the taxpayer would be able to take

advantage of the benefits of section 6213(f).

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 determination of

relief from joint and several liability 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. section 362(b) that permits the filing of a

petition for determination of relief from joint and several

liability, nor is there any suggestion in the record that the

bankruptcy court granted petitioner relief from the automatic

3 In contrast, when Congress drafted sec. 6404(g) (now sec. 6404(h)) for the purpose of expanding the Court’s jurisdiction to review requests for abatement of interest, the provision included special rules expressly referring to sec. 6213. To the same effect, sec. 7436(d), involving determinations of employment status, includes a cross-reference to sec. 6213(f). - 10 -

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

the automatic stay will remain in effect until petitioner’s

bankruptcy case is closed or dismissed or a discharge is granted

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

It follows from our holding in this case that petitioner has

effectively lost the opportunity to obtain judicial review of

respondent’s notice of determination in this Court.4 In

particular, Congress did not include in section 6015 a tolling

provision comparable to section 6213(f) that would extend the

period for petitioner to file a petition for determination of

relief from joint and several liability with the Court. Although

the outcome in this case may seem at odds with the public

policies underlying section 6015, the gap in the section 6015

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.

4 However, petitioner may still have a remedy. We note that in certain circumstances debtors are permitted to raise claims for relief from joint and several liability before the bankruptcy court. See In re Hinckley, 256 Bankr. 814 (Bankr. M.D. Fla. 2000) (debtor permitted to raise sec. 6015 claim in objection to the Commissioner’s proof of claim); French v. United States, 242 Bankr. 369 (Bankr. N.D. Ohio 1999) (debtor permitted to raise sec. 6015 claim in adversary proceeding brought pursuant to 11 U.S.C. sec. 505(a)). - 11 -

To reflect the foregoing,

An order of dismissal for

lack of jurisdiction will be

entered.