In re Midwest Teleproductions Co., Inc.

Decision Date04 February 1987
Docket NumberBankruptcy No. 585-1099.
Citation69 BR 675
PartiesIn re MIDWEST TELEPRODUCTIONS CO., INC., Debtor.
CourtU.S. Bankruptcy Court — Northern District of Ohio

Joanne Rutkowski, Trial Atty., Tax Div., Washington, D.C., Patrick M. McLaughlin, U.S. Atty., Cleveland, Ohio, for I.R.S.

Jerome Leiken, Cleveland, Ohio, for debtor.

FINDING AS TO OBJECTION TO CLAIM

H.F. WHITE, Bankruptcy Judge.

On September 18, 1986 Midwest Teleproductions, Inc. (herein "Midwest"), debtor and debtor in possession, filed an objection to the claim of the Internal Revenue Service (herein "IRS") filed June 4, 1986 for FUTA taxes as being filed after the bar date. A hearing was held on December 2, 1986, and the parties agreed to submit the matter to the court upon briefs and stipulations of facts. On December 18, 1986 Midwest filed its brief which contains a statement of facts to which the United States agreed in its brief submitted January 8, 1987.

The salient facts are as follows. On September 12, 1985 Midwest filed its chapter 11 petition, and by an order entered September 19, 1985, the court set a bar date of January 22, 1986 for filing proofs of claim. On January 2, 1986 the IRS filed an unsecured priority claim in the total sum of $8,878.06 including a penalty of $1,282.53, for withholding and FICA taxes for the first and third quarters of 1984, and for withholding and FICA taxes for the first and third quarters of 1985, with interest. The proof of claim states at item four that "the ground of liability is taxes due under the internal revenue laws of the United States."

On June 4, 1986 and after the claims bar date, the IRS filed an unsecured priority claim in the total sum of $6,701.49 including a penalty of $923.10, for FUTA taxes for 1982 ($3,947.87) and 1983 ($193.46), with interest. The proof of claim states that it is "Supplemental # 1 to Proof of Claim filed 1-2-86", and contains the same language at item four. Midwest listed the IRS in its schedules as a priority creditor with a withholding tax claim of $3,963.64 for 1985, and a FUTA tax claim of $2,203.08 for 1985; Midwest filed its schedules on October 15, 1985.

The FUTA tax return (Form 940) for 1982 was due January 31, 1983 and was signed by Midwest on May 24, 1984. The agreed stipulations do not indicate when the tax returns were filed or received by the IRS. On January 6, 1986 the IRS issued a notice to Midwest of a proposed tax increase due to a discrepancy in Midwest's state report for the tax year ending December 31, 1982. See Exhibit D. An accurate determination of federal tax liability is not possible without a prior, accurate determination of state contribution liability. I.R.C. §§ 3301 and 3302 (West 1979 and 1986 Supp.). The notice apprised Midwest of the discrepancy and gave it ninety days to assent to, or change, the corrected sums; the increased tax liability was estimated to be $3,947.87. This tax was actually assessed on May 19, 1986. See IRS proof of claim filed June 4, 1986.

On October 30, 1985 the IRS issued another notice to Midwest of a proposed tax increase due to a discrepancy in Midwest's state report for the tax year ending December 31, 1983. See Exhibit E. The notice apprised Midwest of the discrepancy and gave it ninety days to assent to, or change, the corrected sums; the increased tax liability was estimated to be $193.46. This tax was actually assessed on March 24, 1986. See IRS proof of claim filed June 4, 1986. The FUTA tax liabilities were assessed approximately one to two and one-half months before the supplemental claim was filed.

The issue presented is whether the supplemental claim of the IRS for FUTA tax liability filed after the claims bar date should be allowed as an amendment to the timely-filed IRS claim for FICA and withholding tax liability. The issue is not a new one, and two lines of authority have emerged. See In re Overly-Hautz Co., 57 B.R. 932, 936 (Bankr.N.D.Ohio 1986) which cites Menick v. Hoffman, 205 F.2d 365 (9th Cir.1953) and In re Emerald Green Corp., 2 B.C.D. (CRR) 938 (Bankr.E.D.N.Y.1976) for the liberal view, and United States v. International Horizons, Inc. (In re International Horizons, Inc., 751 F.2d 1213 (11th Cir.1985) for the conservative view.

In allowing the amended proof of claim for corporate income tax filed one day after the bar date, and preceded by two claims for withholding tax and social security tax, the court in Emerald Green placed reliance upon the prior tax claims as being of the "same genre" as the amended claim, and falling "within the matrix of an indebtedness" due the federal government in "their revenue collection function." 2 B.C.D. (CRR) at 939. See also, Menick, 205 F.2d 365. Earlier courts have analyzed the allowability of a late-filed claim as an amended claim under Rule 715 of the former Rules of Bankruptcy Procedure which incorporated Rule 15 of the Federal Rules of Civil Procedure. The test applied was whether the claim arose out of the same conduct, transaction or occurrence set forth in the prior, timely-filed claims. See International Horizons, 751 F.2d at 1215. Bankruptcy Rule 715 is no longer applicable.

This court adopts the liberal view, and concludes that based upon the unique facts of this case, and after balancing the equities as enumerated in In re Miss Glamour Coat Co., 80-2 U.S.T.C. ¶ 9737 (S.D.N.Y. Oct. 8, 1980)...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT