In re Allison

• Decision Date: 04 December 1998
• Docket Number: Adversary No. 98/00102.,Bankruptcy No. 97-12264-7
• Parties: In re Ronald J. ALLISON and Martha J. Allison, Debtors. Ronald J. Allison and Martha J. Allison, Plaintiffs, v. United States of America, Internal Revenue Service and Boilermaker-Blacksmith National Pension Trust, Defendant.
• Court: United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana

232 B.R. 195 (1998)

In re Ronald J. ALLISON and Martha J. Allison, Debtors.

Ronald J. Allison and Martha J. Allison, Plaintiffs, v. United States of America, Internal Revenue Service and Boilermaker-Blacksmith National Pension Trust, Defendant.

Bankruptcy No. 97-12264-7, Adversary No. 98/00102.

United States Bankruptcy Court, D. Montana, Butte Division.

December 4, 1998.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Karl J. England, Attorney at Law, Missoula, MT, for Boilermaker-Blacksmith National Pension Trust.

Ronald Jesse Allison, Martha J. Allison, Forsyth, MT, Pro se.

Victoria Francis, Assistant U.S. Attorney, Billings, MT, for IRS.

ORDER

JOHN L. PETERSON, Bankruptcy Judge.

In this adversary proceeding, self-declared "non-taxpayers," and Chapter 7 debtors ("Debtors") filed a Complaint attacking the levy by the United States of America, Internal Revenue Service ("IRS") on the Debtors' pension payments. Debtor Ronald J. Allison ("Allison") was employed in the 1980s and was a member of the Boilermaker's Union. During his years of employment, Allison made contributions to the Defendant Boilermaker-Blacksmith National Pension Trust ("Trust"). During this same period, Debtors filed a 1983 tax return entitled "No Jurisdiction", reporting wages and other data as "Object" and noted Allison's social security number was "Revoked - Frdlnt Contract." Other years' filings were the same and unsigned. Thus, no returns by the Debtor were deemed filed for the years 1983, 1984, 1985, 1986, 1988, 1989, 1990, 1991, 1994 and 1995. Pursuant to 26 U.S.C. § 6026(b), the IRS filed substitute returns and calculated the amount of taxes due based on employee forms 1099 and W-2s. Now, in their continuing broadside of the IRS, the Debtors have joined the Trust, seeking a determination that all levies against all property seized and sold by the IRS pursuant to the Internal Revenue Code ("IRC") are illegal, and further seeking an injunction against the IRS to stop all future levies and return of $2,781.99 paid over by the Trust to the IRS by reason of the levies,¹ for the period 1998. Additional levies secured the sum of $9,456.00 from November 1995 through October 1997. Debtors allege that all levies by the IRS, including those on the Trust, were "illegal, improper, void and filled with fatal procedural defects."

The present matter is before the Court on Debtors' request for preliminary injunction, a motion to dismiss or in the alternative, a motion for summary judgment filed by the IRS and a motion to dismiss filed by the Trust. After due notice, a hearing was held on these matters on November 9, 1998. Allison appeared pro se, the IRS was represented by assistant U.S. Attorney Victoria Francis, and the Trust was represented by its Montana counsel, Karl J. England. After the hearing, Debtors were granted an additional twenty days to file a supplemental memorandum, which Debtors filed November 30, 1998, and December 1, 1998. The matter is thus ripe for decision.

BACKGROUND

Debtors filed a Chapter 7 bankruptcy petition on August 27, 1997.² Schedule "B" includes a list of interest in IRA, Keogh and other pension or profit sharing plans as "Boilermakers Pension Trust, Kansas City, KS (pension)" owned by the Husband Allison, with current market value as "unknown." Schedule "C," "Property Claimed as Exempt" does not list the Trust.³ Debtors' amended Schedule "E," "Creditors Holding Unsecured Priority Claims," lists the IRS for tax liability for the years 1983, 1984, 1985, 1986, 1988, 1989, 1990 and 1991 as disputed in the sum of $68,491.78 and the tax liability for 1994-95 as disputed in the sum of $1,312.00. The Chapter 7 Trustee abandoned all interest in the Debtors' property and discharge was entered on December 16, 1997. Throughout the Chapter 7 case, Allison, by motion, continued his assault on the IRS claims, which motions were rejected by Court Order as improper procedure. Debtors made no claim against the Trust and the case was closed as a no-asset case by Final Decree entered January 26, 1998. On July 31, 1998, Debtors filed a Motion to Reopen Chapter 7 Bankruptcy Case to pursue claims against the IRS and the Trust. The case was reopened by Order filed August 3, 1998, and this adversary proceeding was filed September 3, 1998.

The record shows by affidavits of IRS agents, exhibits by the IRS and Debtors and the allegations of the Complaint, that with the exception of one year (1988), the Debtors have never challenged, in the U.S. Tax Court, or any other court, the Notice of Deficiency issued by the IRS for the tax years in question. As to the year 1988, that petition was filed February 5, 1991, and on December 31, 1991, the Tax Court entered an "Order of Dismissal and Decision" finding a deficiency of income tax for the year 1988 in the amount of $619.00. That decision was not appealed and is final. Thus, the amount of all tax assessments was uncontested by Debtors.

In addition, when the IRS sought an Order for Entry of Premises to effect levy pursuant to 26 U.S.C. § 6331 in the United States District Court for the District of Montana, to which Debtors replied through a Motion to Quash Service and on other grounds, the Court on May 23, 1997, held:

28 U.S.C. § 2410 allows taxpayers to file actions challenging the procedural aspects of tax liens, but not the merits of the underlying tax assessments. Arford v. United States, 934 F.2d 229, 232 (9th Cir.1991). In his brief Allison claims he is only challenging the Internal Revenue Services\' "failure to adhere to Congressionally mandated procedures." Thus, the appropriate means by which Mr. Allison can challenge the instant action taken by the IRS is by way of a separate action under 28 U.S.C. § 2410, not by way of motion to quash.

Allison appealed to the Ninth Circuit Court of Appeals, No. 97-35560. The Judgment of the District Court was affirmed on April 2, 1998, with the Court, in Memorandum, noting:

The District Court properly denied the motions because, Allison, who was not a party to the ex parte writ of entry proceedings, cannot use those proceedings as a forum for airing his assessment and collection grievances with the Internal Revenue Service. (citing cases).

Allison further challenged the levy and sale of real and personal property by filing an action against the purchasers of said property in Montana State District Court. That action was dismissed on October 29, 1997. Allison appealed to the Montana Supreme Court on June 9, 1998. That Court, in Cause No. 97-641 (unpublished), affirmed, stating the United States was an indispensable party, but not joined in the quiet title action. Allison's action was based on 28 U.S.C. § 2410, and 26 U.S.C. §§ 7402, 7421 and 7422. The Court held Allison failed to allege the IRS has a mortgage or lien on the property in dispute which did not involve the Trust pension payments. Allison failed to correct the deficiency of the state court action.

In each of the tax years 1983-1991 (excluding 1988), a notice of deficiency was duly sent to Debtors stating they had 90 days to file a petition with the United States Tax Court for a redetermination of the deficiency, and failure to file within the 90 day period would result in a loss of a redetermination. Affidavit of Pat Taylor, with Exhibits. As noted above, Tax Court relief was sought by Debtors for tax year 1988, and denied in favor of the 1988 deficiency. For the tax years 1994 and 1995, assessments were made pursuant to 26 U.S.C. § 6026(b) on August 27, 1996, but no enforcement action has been taken and no Federal tax lien recorded. Taylor affidavit p. 7.

The levy of the Trust funds was a continuing levy effective November 1, 1995. The levy was stayed by the IRS on September 3, 1997, due to the bankruptcy petition and began again on June 1, 1998. Release of the levy was made by the IRS when Debtors' case was reopened.

Summary Judgment under Bankruptcy Rule 7056, which adopts Rule 56, F.R.Civ. P., is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The United States Supreme Court has interpreted this standard to mean that summary judgment is not appropriate if "reasonable minds could differ as to the impact of the evidence." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Stated differently —

Evaluative judgment between two rationally possible conclusions from facts cannot be engaged in on summary judgment. Only where the facts supportive of a summary judgment can be held to have so unambiguously established the actualities of a situation as to leave no basis of substance for dispute as to their reality or as to the conclusion required from them is a summary judgment entitled to be entered. (Emphasis in original).

Chenette v. Trustees of Iowa College, 431 F.2d 49, 53 (8th Cir.1970). The Court has considered all of the affidavits with attached exhibits, the Complaint and Debtors' exhibits attached to the memorandum of the Debtors and finds that matter may be disposed of by summary judgment on the facts and as a matter of law.

JURISDICTION

The only allegation of this Court's jurisdiction on the Complaint is in ¶ 7 that "this action is commenced pursuant to the Internal Revenue Code (U.S.I.R.C.) and the U.S. Bankruptcy Code (11 U.S.C.) and other sections of the federal Codes (United States Code Annotated)." Debtors' Complaint fails, in this instance, to comply with F.R.B.P. 7008(c), which provides that the Complaint "shall contain a statement that the proceeding is core or non-core and, if non-core, that the pleader does or does not consent to entry of final orders or judgment by the bankruptcy judge."

Jurisdiction may attach under § 505 of the Bankruptcy Code. In re Lipetzky, 3 Mont. 131, 135-36, 64 B.R. 431,...