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).
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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.
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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.
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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.
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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
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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
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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
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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.
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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.
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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.