In re Colish
| Citation | 239 BR 670 |
| Decision Date | 30 September 1999 |
| Docket Number | Bankruptcy No. 197-14664-575. Adversary No. 197-1399-575. |
| Parties | In the Matter of Jerrie S. COLISH, Debtor. Jerrie S. Colish, Plaintiff, v. United States of America, Department of the Treasury, Internal Revenue Service, Defendants. |
| Court | United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Eastern District of New York |
Fischoff & Associates, Garden City, New York, by Gary Fischoff, for plaintiff.
U.S. Department of Justice, Washington, D.C., by Bartholomew Cirenza, for defendants.
OPINION ON CROSS-MOTIONS FOR PARTIAL SUMMARY JUDGMENT
Before the Court are the cross-motions of defendants United States of America, Internal Revenue Service and Department of Treasury (collectively, the "Government") and plaintiff Jerrie S. Colish ("Debtor") for partial summary judgment in this adversary proceeding. The issue presented in these motions is whether Debtor's federal income tax liabilities for the years 1991, 1992 and 1993 are nondischargeable under 11 U.S.C. § 523(a)(1)(A). The following opinion concerns the applicability of section 523(a)(1)(A) and does not dispose of any other issues raised in this adversary proceeding concerning the dischargeability of Debtor's federal income tax liabilities. Section 523(a)(1)(A) provides, in pertinent part, that income taxes assessed within 240 days of the filing of a bankruptcy petition, plus any time during which the 240 day time period is tolled by a pending offer in compromise, plus 30 days, are nondischargeable. In deciding whether Debtor's liabilities for tax years 1991, 1992 and 1993 and dischargeable, the Court must determine, first, whether Debtor's offer in compromise was made within the relevant statutory time period and, then, whether more than 240 days, plus the time an offer in compromise was pending, plus 30 days, had elapsed for each tax year at issue by the time Debtor filed his petition.
The Court has jurisdiction of this core proceeding under 28 U.S.C. §§ 1334(b) and 157(b)(2)(A), (I), and (O), and the Order of Reference, dated August 28, 1986, of the United States District Court for the Eastern District of New York.
As required by E.D.N.Y. L.B.R. 7056-1, the Government filed and served a statement of material facts in support of its motion. Debtor filed and served a statement of material facts in support of its cross-motion. The parties have not materially controverted the factual statements contained in the respective Local Rule 7056-1 statements. Accordingly, the material facts contained in those statements will be deemed admitted. See E.D.N.Y. L.B.R. 7056-1.1 On April 29, 1997, Debtor filed a petition under Chapter 7 of the Bankruptcy Code.
The Internal Revenue Service (the "IRS") assessed Debtor's 1991 taxes on May 18, 1992. Prior to the assessment, Debtor had submitted an offer in compromise for tax years 1986 through 1991 on IRS Form 656,2 and the IRS had acknowledged the offer in writing. On June 10, 1992, Debtor submitted an amended offer in compromise for tax years 1987 through 1991 on IRS Form 656. The designation "amended" appears on the caption of this second IRS Form 656 submitted by Debtor. The IRS acknowledged Debtor's amended offer in compromise on July 14, 1992. On April 6, 1993, the IRS acknowledged a second amended offer in compromise submitted by Debtor for tax years 1987 through 1991, which added tax year 1992.
The IRS issued a letter formally rejecting Debtor's offer in compromise for tax years 1987 through 1992, as amended, on December 2, 1993. In addition, the IRS stamped each of Debtor's IRS Form 656 offers in compromise, which were acknowledged respectively on April 30, 1992, July 14, 1992 and April 6, 1993, "Rejected December 2, 1993."
Subsequently, on March 30, 1994, Debtor submitted a second offer in compromise on IRS Form 656 for tax years 1987 through 1993. The IRS acknowledged the offer on April 20, 1994. That offer was the first offer in compromise acknowledged by the IRS after assessment of Debtor's 1991 tax liabilities. Approximately seven hundred (700) days elapsed between the IRS's tax assessment of Debtor's 1991 tax liabilities and the April 20, 1994 acknowledgment of Debtor's offer in compromise.
The IRS assessed Debtor's liabilities for tax year 1992 on May 10, 1993. Debtor's first offer in compromise for tax year 1992 made after the assessment was the one acknowledged by the IRS on April 20, 1994. Three hundred fifty-two (352) days elapsed between date of the IRS's assessment of Debtor's 1992 tax liabilities and the April 20, 1994 acknowledgment of Debtor's offer in compromise, which included compromise of Debtor's 1992 tax liabilities. The IRS formally rejected Debtor's April 20, 1994 offer on August 19, 1994.
The IRS assessed Debtor's 1993 taxes on May 30, 1994. On September 9, 1994, subsequent to the IRS's assessment of Debtor's 1993 tax liabilities. Debtor submitted an offer in compromise on IRS Form 656 for the tax years 1986 through 1993. The IRS acknowledged Debtor's offer on November 17, 1994. One hundred sixty-nine (169) days elapsed between the IRS's May 30, 1994 assessment of Debtor's 1993 taxes and its November 17, 1994 acknowledgment of Debtor's offer in compromise concerning 1993 tax liabilities.
Debtor submitted an amended offer in compromise concerning tax years 1986 through 1994 on May 10, 1995, which offer was acknowledged on May 19, 1995. By letter dated June 22, 1995, the IRS notified Debtor that the May 19, 1995 offer was rejected, but that Debtor had a right to protest the IRS's determination and request a conference. By letter dated July 18, 1995, Debtor submitted a protest and requested a conference. Subsequently, by letter dated May 14, 1997, the IRS rejected Debtor's offer to compromise liabilities for tax years 1986 through 1994.
Summary judgment shall be granted in favor of a moving party where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c) (). A court faced with a summary judgment motion does not make credibility determinations or weigh the evidence; all inferences must be construed in a light most favorable to the nonmoving party. See Catanzaro v. Weiden, 140 F.3d 91 (2d Cir.1998). Summary judgment is inappropriate where there is sufficient evidence in the record such that a reasonable fact finder could find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); L.B. Foster Co. v. America Piles, Inc., 138 F.3d 81, 87 (2d Cir.1998). Conclusory allegations, conjecture and speculation will not create a genuine issue of fact. Kerzer v. Kingly Manufacturing, 156 F.3d 396, 400 (2d Cir.1998). The Court may consider the whole record, not just the evidence highlighted by the parties. Turco v. Hoechst Celanese Corp., 101 F.3d 1090, 1093 (5th Cir.1996).
For the following reasons, the Court concludes that there is no genuine issue as to any material fact, that 11 U.S.C. § 523(a)(1)(A) does not operate to bar the discharge of Debtor's liabilities for tax years 1991 and 1992 and that Debtor's liabilities for tax year 1993 are nondischargeable under 11 U.S.C. § 523(a)(1)(A).
11 U.S.C. § 507(a)(8)(A)(ii).
The Government contends that the statutory time limitation set forth in section 507(a)(8)(A)(ii) is tolled by any offer in compromise, beginning on the date of the formal acknowledgment of the offer, regardless of whether the offer in compromise was interposed before or after a tax assessment in respect of the relevant year. The Court disagrees.
On its face, section 507(a)(8)(A)(ii) provides that the 240 day period is tolled where an offer in compromise is made after an assessment is pending. It is a well-settled rule of statutory construction that a court may depart from the literal meaning of a statute only where "`the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters.'" United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (citations omitted).
Although the Second Circuit has not yet spoken on the issue, the construction of the tolling provision in section 507(a)(8)(A)(ii) was squarely addressed by the United States Court of Appeals for the Sixth Circuit in In re Aberl, 78 F.3d 241, 244 (6th Cir.1996). In that case, the Sixth Circuit, affirming the district court and bankruptcy court's determinations, held that section 507(a)(7)(A)(ii) (now section 507(a)(8)(A)(ii)) "was unambiguous in its intent to apply only to offers in compromise submitted by debtors after the IRS's formal assessment of taxes." In so doing, the Circuit Court observed that it "is not the Court's role to address perceived inadequacies in a statute." Id. at 244 (citations omitted).
The Government cites to the legislative history underlying the enactment of section 507(a)(8)(A)(ii) in support of its position that Congress intended that the tolling...
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