T.C. Memo. 1998-300
UNITED STATES TAX COURT
RANDAL W. HOWARD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18627-97. Filed August 19, 1998.
Randal W. Howard, pro se.
Rick V. Hosler and Pamela Wilson-Fuller, for respondent.
MEMORANDUM OPINION
DAWSON, Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos pursuant to the provisions of
section 7443A(b)(4) 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.
1
All section references are to the Internal Revenue Code,
unless otherwise indicated. All Rule references are to the Tax
Court Rules of Practice and Procedure.
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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 and to strike as to the taxable years 1989, 1990,
1991, and 1993. The question to be decided is whether the
petition for redetermination was filed with the Court within the
period prescribed in section 6213(f).
Background
On June 14, 1991, petitioner filed a voluntary petition for
relief under chapter 13 of the Bankruptcy Code with the U.S.
Bankruptcy Court for the District of Arizona.
On February 21, 1992, respondent mailed a notice of
deficiency to petitioner determining a deficiency in his Federal
income tax for 1989 in the amount of $4,733, as well as additions
to tax in the amounts of $1,182.50 and $320.01 pursuant to
sections 6651(a) and 6654(a), respectively.
On June 23, 1993, respondent mailed a notice of deficiency
to petitioner determining deficiencies in and additions to his
Federal income taxes for 1990 and 1991 as follows:
Additions to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6654
1990 $8,419 $2,105 $554
1991 5,483 1,371 318
On July 24, 1996, the bankruptcy court entered an order
granting the bankruptcy trustee's motion to dismiss petitioner's
case. The bankruptcy court also denied petitioner's request for
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a "continuing injunction" against the Internal Revenue Service
(IRS) insofar as the IRS had filed a claim with the court.
Petitioner subsequently filed an appeal challenging the dismissal
of his chapter 13 bankruptcy case with the U.S. District Court
for the District of Arizona.
On December 6, 1996, petitioner filed a petition for relief
under chapter 7 of the Bankruptcy Code with the U.S. Bankruptcy
Court for the District of Arizona.
On March 6, 1997, respondent issued a notice of deficiency
to petitioner determining a deficiency in his Federal income tax
for 1993 in the amount of $3,136, as well as an addition to tax
pursuant to section 6651(a)(1) in the amount of $784.
On April 7, 1997, the bankruptcy court issued an order of
discharge in petitioner's chapter 7 bankruptcy case.
On August 22, 1997, respondent issued notices of deficiency
to petitioner determining deficiencies in and additions to his
Federal income taxes for the taxable years and in the amounts as
follows:
Additions to Tax
Year Deficiency Sec. 6651(a) Sec. 6654(a)
1994 $4,162 $775.75 $154.91
1995 10,146 2,254.50 482.15
On September 6, 1997, the U.S. District Court for the
District of Arizona denied petitioner's appeal of the dismissal
of his chapter 13 bankruptcy case.
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On September 8, 1997, petitioner filed a petition for
redetermination with the Court contesting the notices of
deficiency for the taxable years 1989, 1990, 1991, and 1993.2
The petition arrived at the Court in an envelope bearing a U.S.
Postal Service postmark date of September 4, 1997. On November
6, 1997, petitioner filed an amended petition contesting the
notices of deficiency for the taxable years 1989, 1990, 1991,
1993, 1994, and 1995.
Respondent filed a motion to dismiss for lack of
jurisdiction and to strike as to the taxable years 1989, 1990,
1991, and 1993 on the ground that the petition was not filed
within the time prescribed in section 6213(f). Petitioner filed
a response to respondent's motion to dismiss and to strike
asserting that his petition was filed within the 150-day period
prescribed in section 6213(f). Petitioner contends that the 150-
day period should be measured from April 7, 1997--the date that
the bankruptcy court issued its order of discharge in his chapter
7 bankruptcy case. Respondent subsequently filed a reply to
petitioner's response conceding that the petition was timely
filed in respect of the notice of the deficiency for the taxable
year 1993.3 Nonetheless, respondent maintains that the petition
2
At the time the petition was filed, petitioner resided
at Tucson, Arizona.
3
The notice of deficiency for 1993 was issued on Mar. 6,
1997--during the pendency of petitioner's bankruptcy petition
(continued...)
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is untimely with respect to the notices of deficiency for the
taxable years 1989, 1990, and 1991.
This matter was called for hearing at the Court's motions
session in Washington, D.C. Counsel for respondent appeared at
the hearing and offered argument in support of the pending
motion. Although petitioner did not appear at the hearing, he
did file a written statement with the Court pursuant to Rule
50(c).
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 to redetermine a deficiency depends upon the
issuance of a valid notice of deficiency and a timely filed
petition. Rule 13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27
(1989); Normac, Inc. v. Commissioner, 90 T.C. 142, 147 (1988).
Section 6212(a) expressly authorizes the Commissioner, after
determining a deficiency, to send a notice of deficiency to the
taxpayer by certified or registered mail. The taxpayer, in turn,
generally has 90 days from the date the notice of deficiency is
3
(...continued)
under ch. 7. The petition contesting the notice of deficiency
for 1993 was timely mailed to the Court on Sept. 4, 1997, exactly
150 days after the bankruptcy court entered its order of
discharge with respect to petitioner's bankruptcy petition under
ch. 7. Sec. 6213(f).
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mailed to file a petition in this Court for a redetermination of
the deficiency. Sec. 6213(a).
An exception to the normal 90-day filing period arises where
the taxpayer has filed a petition for relief under the Bankruptcy
Code. In particular, 11 U.S.C. section 362(a)(8) (1994) 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 --
* * * * * * *
(8) the commencement or continuation of
proceeding before the United States Tax Court concerning
the debtor.
In short, the filing of a bankruptcy petition invokes the
automatic stay which precludes the commencement or continuation
of proceedings in this Court. Kieu v. Commissioner, 105 T.C.
387, 391 (1995); Allison v. Commissioner, 97 T.C. 544, 545
(1991).
The period that the automatic stay remains in effect is
prescribed in 11 U.S.C. section 362(c) (1994) as follows:
(c) Except as provided in subsections (d), (e),
and (f) of this section--
(1) the stay of an act against property
of the estate under subsection (a) of this
section continues until such property is no
longer property of the estate; and
(2) the stay of any other act under
subsection (a) of this section continues
until the earliest of--
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(A) the time the case is
closed;
(B) the time the case is
dismissed; or
(C) if the case is a case
under chapter 7 of this title
concerning an individual or a case
under chapter 9, 11, 12, or 13 of
this title, the time a discharge is
granted or denied.
In sum, 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); Neilson v. Commissioner, 94 T.C. 1, 8 (1990).
Although respondent is free to issue a notice of deficiency
to a taxpayer who has filed a bankruptcy petition, see 11 U.S.C.
sec. 362(b)(9) (1994),4 the normal 90-day period for filing a
timely petition with this Court is suspended for the period
4
11 U.S.C. sec. 362(b)(9) (1994) 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),--
* * * * * * *
(B) of the issuance to the debtor
by a governmental unit of a notice
of tax deficiency;
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during which the taxpayer is prohibited by reason of the
automatic stay from filing a petition in this Court and for 60
days thereafter. Sec. 6213(f); Olson v. Commissioner, 86 T.C.
1314, 1318-1319 (1986); McClamma v. Commissioner, 76 T.C. 754,
757 (1981).
In McClamma v. Commissioner, supra, the Court was presented
with the question of the proper computation of the expanded
period for filing a timely petition with the Court pursuant to
section 6213(f) where the taxpayers had filed a bankruptcy
petition after receiving a notice of deficiency. In particular,
the Commissioner issued a notice of deficiency to John and
Catherine McClamma on February 15, 1980. On March 3, 1980, John
McClamma filed a bankruptcy petition under chapter 7 of the
Bankruptcy Code. On April 18, 1980, while John McClamma's
bankruptcy case was pending, the taxpayers filed a joint petition
for redetermination with the Court. On September 19, 1980, the
bankruptcy court issued a discharge order in John McClamma's
bankruptcy case. The Commissioner subsequently filed a motion to
dismiss for lack of jurisdiction as to John McClamma on the
grounds that: (1) John McClamma was barred by the bankruptcy
automatic stay from filing a petition for redetermination with
the Court on April 18, 1980; and (2) John McClamma did not file a
timely petition following his discharge in bankruptcy.
In granting the Commissioner's motion to dismiss, the Court
concluded that the automatic stay barred John McClamma from
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filing a petition with the Court on April 18, 1980. McClamma v.
Commissioner, supra at 757. The Court further concluded that,
following his discharge in bankruptcy, John McClamma failed to
file a petition with the Court within the time prescribed in
section 6213(f). That Court stated:
As to the time John had to file a new petition in
this Court, respondent argues that the unexpired
portion of the 90-day period provided under section
6213(a) is added to the 60 days provided by section
6213(f). Since the 90-day period was stayed by the
filing of a bankruptcy petition after having run 17
days, 73 days plus the 60 days allowed after the
automatic stay was lifted yields 133 days. We agree
with respondent that John had until January 30, 1981
(133 days from the date of discharge in bankruptcy,
Sept. 19, 1980), to file a new petition in this Court
to contest his Federal income tax liability for 1977.
[Fn. refs. omitted.]
Id. at 757-758; see Ash v. Commissioner, T.C. Memo. 1989-367.
The parties in the instant case disagree whether the
petition was timely filed with respect to the notices of
deficiency for the taxable years 1989, 1990, and 1991.
Respondent contends that, by virtue of petitioner's bankruptcy
filings (and the resulting suspensions of the running of the 90-
day period for filing a timely petition with the Court pursuant
to section 6213(f)), the time for filing a timely petition with
the Court expired on June 23, 1997. Petitioner counters that his
petition was timely filed on the ground that section 6213(f)
served to extend the period for filing a petition to September 4,
1997--150 days after the date that the bankruptcy court entered
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its discharge order in his chapter 7 bankruptcy case. We agree
with respondent.
A review of the relevant dates is as follows:
June 14, 1991------Chapter 13 bankruptcy petition
February 21, 1992--Notice of deficiency for 1989
June 23, 1993------Notice of deficiency for 1990, 1991
July 24, 1996------Chapter 13 bankruptcy dismissed
December 6, 1996---Chapter 7 bankruptcy petition (135
days from July 24, 1996)
April 7, 1997------Order of discharge of Chapter 7
August 22, 1997----Notice of deficiency for 1994, 1995
September 8, 1997--Petition filed for 1989-1991 and 1993
On June 14, 1991, petitioner filed a bankruptcy petition
under chapter 13 of the Bankruptcy Code. On February 21, 1992,
respondent issued a notice of deficiency to petitioner for the
taxable year 1989. On June 23, 1993, respondent issued a notice
of deficiency to petitioner for the taxable years 1990 and 1991.
Because petitioner's bankruptcy petition under chapter 13 was
pending on the dates that the notices of deficiency for 1989,
1990, and 1991 were issued, it follows that petitioner was barred
from filing a petition for redetermination with the Court by
virtue of the automatic stay imposed under 11 U.S.C. section
362(a)(8). Further, pursuant to section 6213(f), the 90-day
statutory period for filing a timely petition with the Court was
suspended while the automatic stay remained in effect and for 60
days thereafter.
On July 24, 1996, the bankruptcy court dismissed
petitioner's bankruptcy petition under chapter 13, thereby
terminating the automatic stay. See 11 U.S.C. sec. 362(c)(2)(B);
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Allison v. Commissioner, 97 T.C. at 545. As of July 24, 1996, by
operation of section 6213(f), petitioner had a total of 150 days
to file a timely petition with the Court contesting the notices
of deficiency for 1989, 1990, and 1991. In particular,
petitioner enjoyed the 60-day suspension period prescribed in
section 6213(f), plus the normal 90-day filing period prescribed
in section 6213(a).
During the ensuing period, petitioner did not file a
petition for redetermination with the Court. Nonetheless, on
December 6, 1996, petitioner filed a bankruptcy petition under
chapter 7 of the Bankruptcy Code. As of December 6, 1996, 135
days had elapsed since July 24, 1996--the date that the
bankruptcy court dismissed petitioner's bankruptcy petition under
chapter 13, leaving petitioner with 15 days to file a timely
petition with the Court pursuant to section 6213(f). However, as
a result of the filing of petitioner's bankruptcy petition under
chapter 7, petitioner again was barred from filing a petition for
redetermination with the Court by virtue of the automatic stay
imposed under 11 U.S.C. section 362(a)(8). Further, the
remaining 15-day period that petitioner had for filing a timely
petition with the Court to contest the notices of deficiency for
1989, 1990, and 1991 was suspended pursuant to section 6213(f).
On April 7, 1997, the bankruptcy court entered an order of
discharge in petitioner's chapter 7 bankruptcy case, which served
to terminate the automatic stay imposed under 11 U.S.C. section
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362(a)(8). See 11 U.S.C. sec. 362(c)(2)(C). Upon the
termination of the automatic stay on April 7, 1997, petitioner
had a total of 75 days to file a timely petition with the Court
with respect to the notices of deficiency for 1989, 1990, and
1991. In particular, petitioner again enjoyed the 60-day
suspension period prescribed in section 6213(f), plus 15 days
representing the unexpired portion of the filing period that
remained prior to the date that petitioner filed his bankruptcy
petition under chapter 7. Consistent with the foregoing, the
period for filing a timely petition for redetermination with the
Court with respect to the notices of deficiency for the taxable
years 1989, 1990, and 1991 expired on Monday, June 23, 1997.5
Petitioner's argument that he was entitled to file his
petition contesting the notices of deficiency for 1989, 1990, and
1991 within 150 days after the bankruptcy court issued its order
of discharge in his chapter 7 bankruptcy case is simply contrary
to the plain terms of section 6213(f) and this Court's holding in
McClamma v. Commissioner, supra.
In accordance with the foregoing, it follows that the
petition filed in this case on September 8, 1997, was not timely
filed with respect to the notices of deficiency for 1989, 1990,
and 1991. Because respondent now concedes that the petition was
5
Because the last day for filing a timely petition with
the Court was Saturday, June 21, 1997, the period was extended to
Monday, June 23, 1997, pursuant to sec. 6213(a).
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timely filed with respect to the notice of deficiency for 1993,6
we will grant respondent's motion to dismiss for lack of
jurisdiction and to strike as to the petition and amended
petition only insofar as respondent moves to dismiss and to
strike as to the taxable years 1989, 1990, and 1991.
To reflect the foregoing,
An order granting respondent's
motion to dismiss for lack of
jurisdiction and to strike will be
issued insofar as respondent moves to
dismiss and to strike as to the
taxable years 1989, 1990, and 1991.
6
Also there is no question that the amended petition was
timely as to the 1994 and 1995 tax years.