In re Harker
| Decision Date | 10 February 2004 |
| Docket Number | No. 03-1326.,03-1326. |
| Citation | 357 F.3d 846 |
| Parties | In re: Dennis HARKER, Debtor. Dennis Harker, Appellant, v. United States of America (Acting through the Internal Revenue Service), Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Jerrold Wanek, argued, Des Moines, Iowa, for appellant.
Rachel I. Wollitzer, argued, U.S. DOJ, Tax Division, Washington DC, for appellee.
Before MORRIS SHEPPARD ARNOLD, HEANEY, and RILEY, Circuit Judges.
This is a tax evasion case which has been in the courts for over a decade. The facts have been discussed several times below1 and are summarized here for the purposes of this appeal.
In 1994, the United States Tax Court determined that Dennis Harker was responsible for certain tax deficiencies and fraud penalties for the years 1985-87. Harker v. Comm'r, 68 T.C.M. (CCH) 1272 (1994), aff'd, 82 F.3d 806 (8th Cir.1996). On May 1, 1995, the Tax Court entered a decision stating the amount of Harker's tax deficiencies. On May 16, 1995, Harker filed a Chapter 13 petition in bankruptcy court. The bankruptcy court determined that the petition was filed in bad faith and ordered Harker to convert the case to a Chapter 7 proceeding within 20 days, or an automatic dismissal would be entered. In re Harker, No. 95-1417-CH, 1996 WL 905910 (Bankr.S.D.Iowa June 14, 1996), aff'd, 112 F.3d 513 (8th Cir.1997) (unpublished table opinion). Harker failed to convert the case and his Chapter 13 bankruptcy case was dismissed.
On July 12, 1996, the IRS recorded notices of federal tax liens with respect to Harker's 1985-87 liabilities totaling $1,073,298.20, and announced its intent to sell two of Harker's properties.2 Harker filed a motion requesting that the court find the filing of the tax liens void as a violation of the automatic stay issued in the Chapter 13 case. The bankruptcy court denied the motion, holding that the automatic stay terminated when Harker failed to convert his Chapter 13 case to a Chapter 7 case within the 20-day period in accordance with its prior order.
On September 8, 1997, Harker filed a Chapter 7 bankruptcy case and on September 23, 1997, he filed a complaint commencing this adversary proceeding to determine the dischargeability of his 1985-87 tax liabilities under the bankruptcy code. The bankruptcy court determined that the 1985 and 1986 tax, penalties, and interest, and the 1987 liabilities, which did not include tax, were dischargeable. The United States appealed and the district court affirmed the bankruptcy court's determination with respect to the penalties for 1985-87 and the taxes for 1987, but reversed the bankruptcy court's conclusion as to the taxes and interest for 1985 and 1986. The district court then remanded the case to the bankruptcy court to determine the amount of Harker's nondischargeable taxes and interest.
On remand, the bankruptcy court held a hearing on the issue of the amount of the nondischargeable liabilities. The United States moved to supplement the record with a declaration by IRS Revenue Officer Howard Hoy. Harker objected to the motion to supplement the record, complaining that he would be denied the opportunity to cross examine Hoy if the declaration was filed. The bankruptcy court did not allow the filing of the Hoy declaration, but reopened the record for additional oral testimony from Hoy. At the close of evidence, the bankruptcy court entered an order determining the amount of Harker's tax, interest, and other nondischargeable liabilities to be $76,819.54 for 1985 and $532,761.96 for 1986. In re Harker, 2002 WL 1058108 at *8. The bankruptcy appellate panel (BAP) affirmed the bankruptcy court's order, In re Harker, 286 B.R. 84 (8th Cir. BAP 2002), and this appeal followed. Harker now argues that the bankruptcy court: (1) erred in finding that the government carried its burden of proof in showing that Harker owed any tax or interest for the years 1985 and 1986; (2) erred in holding that the tax lien on his property was valid and that the payments credited from the sale were involuntary; (3) abused its discretion in reopening the record to allow for additional testimony from Hoy; and (4) erred in refusing to exercise its equitable powers in favor of Harker. We reject these arguments and now affirm as well.
Like the BAP, our court reviews the bankruptcy court's factual findings for clear error and its conclusions of law de novo. In re Vote, 276 F.3d 1024, 1026 (8th Cir.2002).
On appeal, Harker first argues that the bankruptcy court erred in finding that the government carried its burden of proof in showing that Harker owed any tax or interest for the years 1985 and 1986. According to Harker, the court erred in finding that the certified tax assessments constituted prima facie evidence of Harker's tax liability. Harker argues that such a "presumption of correctness" was inappropriate in this case alleging that the tax assessed by the Tax Court does not match Hoy's testimony as to the amount of tax owed. This difference, suggests Harker, makes the assessment inaccurate on its face; thus the government did not meet its burden of proof, nor did the burden shift to Harker.
We disagree. "Tax assessments made by the IRS are presumed correct and the taxpayer bears the burden of proving, by a preponderance of the evidence, that the assessment is erroneous." N.D. State Univ. v. United States, 255 F.3d 599, 603 (8th Cir.2001). Harker did not present any affirmative testimony or evidence regarding the correct amount of the 1985 and 1986 liabilities. Instead, Harker merely asserts that the tax assessed by the Tax Court does not match the tax presented in Hoy's testimony. After reviewing the record, we fail to see this discrepancy and such a blanket assertion, without more, does not rise to the level necessary to dispute the "presumption of correctness." Furthermore, pursuant to 11 U.S.C. § 505(a)(2)(A), a bankruptcy court may not determine "the amount or legality of a tax ... if such amount or legality was contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction." Accordingly, the bankruptcy court did not have jurisdiction to redetermine Harker's tax liability which was established in a prior Tax Court decision.3
Harker next argues that the bankruptcy court erred in finding that the tax lien on his property was valid. According to Harker, since the lien on his property was filed prior to the...
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