In re Fuller, Bankruptcy No. 96-10616

• Decision Date: 03 February 1997
• Docket Number: Bankruptcy No. 96-10616,Adversary No. 96-1061.
• Citation: 204 BR 894
• Parties: In re David W. FULLER, Debtor. David W. FULLER, Plaintiff, v. UNITED STATES of America, INTERNAL REVENUE SERVICE (IRS), Defendant.
• Court: U.S. Bankruptcy Court — Western District of Pennsylvania

204 B.R. 894 (1997)

In re David W. FULLER, Debtor David W. FULLER, Plaintiff, v. UNITED STATES of America, INTERNAL REVENUE SERVICE (IRS), Defendant.

Bankruptcy No. 96-10616, Adversary No. 96-1061.

United States Bankruptcy Court, W.D. Pennsylvania.

February 3, 1997.

COPYRIGHT MATERIAL OMITTED

David W. Fuller, Hermitage, PA, pro se, Debtor.

Gary J. Gaertner, Pittsburgh, PA, Chapter 13 Trustee.

Angelo A. Frattarelli, Washington, DC, for United States, Internal Revenue Service.

OPINION

WARREN W. BENTZ, Bankruptcy Judge.

I. Background

David W. Fuller ("Debtor") filed a voluntary Petition under Chapter 13 of the Bankruptcy Code on May 24, 1996. This is Debtor's third trip to Bankruptcy Court. In 1992, the Debtor filed a Chapter 13 Petition which he voluntarily dismissed in December, 1992. In May, 1993, Debtor filed a Petition under Chapter 7. In the present case, the Debtor has scheduled total assets of $1,450 which consists of cash, $700; household goods, $300; cassette tapes, video tapes, and books, $200; clothes, $200; and camera, $50. The Debtor's schedules show income of $5,174 per month from a long term disability plan. The schedules reveal three creditors — his former bankruptcy attorney, James E. Blackwood, Esq., $4,400; Charles Cricks for a personal loan, $5,000; and the Internal Revenue Service ("IRS") for "Taxes from the year 1989," $2,100. The Debtor lists the IRS as a creditor whose claim is disputed. Debtor's Schedule J reflects total monthly expenditures of $2,160 and excess income of $3,014 ($5,174 - 2,160).

Debtor filed an original Chapter 13 Plan dated June 10, 1996. Debtor proposed a payment of $320 per month for 36 months to pay a 100% dividend to all creditors. Objections to confirmation were filed by the Chapter 13 Trustee and the IRS. The objections were that the Debtor did not account for payment of the Trustee's administrative fees and that the Debtor failed to provide for payment of the IRS claim in the Plan. The IRS filed a proof of claim dated July 5, 1996 in the amount of $410,037.81, consisting of a secured claim in the amount of $367,896.39, a priority claim in the amount of $40,206.76, and a general unsecured claim in the amount of $1,934.66. The IRS filed an amended proof of claim dated August 22, 1996 reducing the amount of its claim to $403,850.63 consisting of a secured claim in the amount of $367,896.39, a priority claim in the amount of $32,889.72 and a general unsecured claim in the amount of $3,064.52.

The Debtor filed a revised Plan to provide for the Trustee's fees. Confirmation was continued generally pending resolution of the Debtor's objections to the IRS claim.

On August 6, 1996, Debtor filed the within COMPLAINT TO DETERMINE VALIDITY AND EXTENT OF TAX LIENS AND OBJECTION TO PROOF OF CLAIM. The Debtor asserts that the IRS's Notices of Federal Tax Lien for the years 1984 through 1991 filed with the Prothonotary of Mercer County, Pennsylvania, are invalid because the Notices "are not certified by `the Secretary of the Treasury of the United States, or his delegate,' as required by Pennsylvania law (74 P.S. 157-1 et seq.)." The Debtor further asserts that the IRS liens do not attach to his future exempt pension benefit as the Debtor has no equity in the pension plan. Debtor asserts that his assets are limited to personal and household items with a total value of $1,450.

In his second cause of action, Debtor asserts that the proof of claim filed by the IRS is invalid for numerous reasons. Debtor asserts that the IRS incorrectly asserts a secured claim of $367,896.39 for the years 1984 through 1991 because the Debtor was discharged in his prior Chapter 7 bankruptcy case of liability for the years 1984 through 1988; that the Proof of Claim form requires a secured creditor to attach "evidence of perfection of security interest" and that the "Facsimile Federal Tax Lien Documents," attached by the IRS are inadequate; and that the IRS has failed to properly execute a signature on the proof of claim form.

The Debtor subsequently filed an Amended Complaint (the original Complaint and the Amended Complaint, collectively the "Complaint") to further assert opposition to that portion of the IRS proof of claim for 1993, 1994 and 1995; years for which the IRS has not filed a lien. The Debtor states that "the alleged debts have no foundation in law and have been improperly imposed."

The IRS has filed a Motion to Dismiss the Complaint. The IRS asserts that the Debtor has litigated these same issues in his prior Chapter 7 case and therefore, the doctrine of collateral estoppel prevents Debtor from litigating the issues again. The IRS further asserts that Debtor's frivolous objection to claim must be overruled and that the case should be dismissed for lack of good faith.

Attached to the IRS's Motion to Dismiss is the DECLARATION of Angelo A. Frattarelli, one of the attorneys for the IRS. The Debtor has filed a motion to strike the DECLARATION alleging that it constitutes a conflict of interest.

The Debtor has also filed a Motion to Determine Good Faith Filing and Request for Evidentiary Hearing and a Motion for Partial Summary Judgment Against IRS's Proof of Claim.

II. Proof of Claim

The Debtor asserts that "the proof of claim filed by the IRS is null and void of legal effect because it was not signed by the official so designated to perform this task."

The original proof of claim filed by the IRS clearly sets forth the amount and nature of its claim. The original claim is signed. The signature is illegible. Following the signature is "/for" and printed under the signature line is "Chief, Insolvency Section." The name, address and telephone number of the creditor are clearly shown in the section of the Claim form entitled "name of creditor."

The Amended Proof of Claim ("Claim") filed by the IRS reduces the previously estimated amount of its priority tax to reflect the amount of tax on income shown on the Debtor's 1995 tax return. The Claim is clearly signed by an IRS employee and the signature is legible.

Debtor asserts that the IRS's Claim must be rejected because 26 CFR § 301.6871(a)-2 authorizes the District Director and no one else to sign a proof of claim.

IRS employees possess the properly delegated authority to file a proof of claim and participate in bankruptcy proceedings on behalf of the United States. In re Schibilsky, 185 B.R. 81 (Bankr.N.D.Ga.1995); In re Harrison, 177 B.R. 564 (Bankr.S.D.Oh.1994). The Claim does have the signature of an IRS employee. The title is printed under the signature line, fully identifying the party responsible for the Claim. As such, the Claim form substantially conforms to all requirements. See In re Vines, 200 B.R. 940, 948 (M.D.Fl.1996); In re White, 168 B.R. 825, 834 (Bankr.D.Conn.1994).

The purpose of the proof of claim form is to enable the debtor and its creditors to know what parties are making claims and in what general amounts. See In re Papp Int'l., Inc., 189 B.R. 939, 946 (Bankr.D.Neb. 1995).

The Debtor has adequate notice of the claim against him and is able to challenge the existence or accuracy of the amount of the Claim.

The Debtor next asserts that the "(d)ocuments accompanying the proof of claim . . . do not comply with Rule 44 of the Federal Rules of Civil Procedure or Rule 902 of the Federal Rules of Evidence as mandated by Bankruptcy Rule 9017;" that the "(d)ocuments accompanying the proof of claim . . . do not comply with Pennsylvania law requiring certification of Notices of Lien by the Secretary of the Treasury of the United States or his delegate."

The IRS has attached to its claim five pages entitled "FACSIMILE FEDERAL TAX LIEN DOCUMENT." The documents identify the taxpayer, the type of tax, tax periods, date assessed, balances and lien recording information. The documents further show the name and title of the authorizing official and the date of preparation. The documents provide all of the information required to enable the Debtor to ascertain the exact origin and nature of the claims against him.

Finally, we note that even though the IRS has provided detailed supporting documentation, other courts have concluded that such documentation is unnecessary. As stated in In re Vines, 200 B.R. at 949:

Vines argues that, under Bankruptcy Rule 3001, the IRS is required to attach copies of any supporting documents such as promissory notes, contracts, court judgments, or evidence of security interest and that such attachment is required for perfection of a security interest. This requirements (sic) derive from Rule 3001(c) and (d) which requires that a claim "based on a writing," be filed in original or duplicate with the Proof of Claim, and that the "Proof of Claim shall be accompanied by evidence that the security interest has been perfected." However, the IRS was not required to attach any documentation to its Proof of Claim because the claim and lien are based not on a writing, but on federal statutes. See In re Jenny Lynn Mining Co., 780 F.2d 585, 587 (6th Cir.) cert. denied, 477 U.S. 905, 106 S.Ct. 3276, 91 L.Ed.2d 566 (1986). Even though part of the IRS\'s claim is secured, the security is a "statutory lien" arising solely out of statutory obligations, see § 101(53), as opposed to a "security interest," such as a lien created by a private agreement, see § 101(51). See 26 U.S.C. § 6321 et seq. (West 1989 & Supp.1994) (creating and defining characteristics of a tax lien). The Proof is therefore not defective due to lack of supporting documentation. This Court upheld this position in United States v. Boyd in holding a tax claim to be based on an obligation created by statute, and not founded on a writing. As such, this Court noted that the IRS was not required to attach documentation to it (sic) claim. 76 A.F.T.R.2d 95-7836, 1995 WL 790049 (M.D.Fla.1995).

As set forth above, the Proof is found to be valid and entitled to the presumptive validity attributed to it under Rule 3001(f). Thus, Vines

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