In re Pennetta, Bankruptcy No. 80 B 04339 Mc.
| Decision Date | 19 April 1982 |
| Docket Number | Bankruptcy No. 80 B 04339 Mc. |
| Citation | 19 BR 794 |
| Parties | In re Ricky Lee PENNETTA, Andrea Darleen Pennetta, Debtors. |
| Court | U.S. Bankruptcy Court — District of Colorado |
Jimmye S. Warren, Asst. U.S. Atty., Denver, Colo., for U.S.
Andrea S. Berger, Denver, Colo., for debtors.
The question presented to the Court for determination is whether or not Claim No. 5, as amended, filed by the Internal Revenue Service (IRS), should be disallowed because the creditor/IRS did not file a timely claim. This matter came to the Bankruptcy Court on the Trustee's Motion to Disallow a Claim against the estate of the Debtors. The Trustee's Motion was filed after receiving the Debtors' Response to Trustee's Report of Claims which alleged that Claim No. 5, as amended, was in violation of Rule 13-302(e) of the Bankruptcy Rules. Upon notice to all involved parties the creditor, represented by the United States Attorney's Office, requested a hearing on the Trustee's Motion. A hearing was held on February 8, 1982, at which Jimmye S. Warren, Assistant U.S. Attorney, appeared for the United States of America, and Andrea S. Berger appeared for the Debtors. Upon request of the Court, both Ms. Berger and Ms. Warren submitted a memorandum of law to the Court.
The facts are as follows: The Debtors timely filed their 1978 tax return, which was due on or before April 15, 1979. The Debtors filed their Petition in Bankruptcy on October 3, 1980, and the first meeting of creditors was held on December 2, 1980. Therefore, June 2, 1981, was the last day for filing an unsecured claim, unless an extension of time was granted by the Court. R. 13-302(e)(2)(A), FRBP. An extension of time was neither applied for nor granted. The Government filed an IRS Proof of Claim on June 30, 1981, for $643.00 with the date the tax was assessed marked "to be assessed." An Amendment to the Proof of Claim was filed on October 9, 1981, reducing the claim to $566.79 and marking the date the tax was assessed as April 23, 1979. The Government, in its memorandum, lists the date of September 14, 1981, as the date the tax was assessed. The Court is unable to ascertain from whence this date was derived and does not consider it apposite to the Court's determination, but because the Government uses it in its argument, the Court will also use the date, but only for the purpose of setting forth the Government's argument.
The Government's argument is that, pursuant to 11 U.S.C. § 1305(a)(1), a proof of claim may be filed for taxes that become payable while the case is pending. Since the tax claimed here was not assessed until September 14, 1981, it could not have become payable until after assessment. The Government further argues that, pursuant to 11 U.S.C. § 1305(b), their claim should be granted priority status.
The Debtors, on the other hand, argue that Rule 13-302(a) obliges every creditor to file a proof of claim in accordance with the time periods fixed by the Rule in order for their claim to be allowed. The Debtors add that there is no indication that a tax claim should be treated any differently than any other unsecured claim in a Chapter 13. The Debtors next argue that 11 U.S.C. § 501 applies to this pre-petition claim of the IRS and that these fixed times are necessary in a Chapter 13 case. Finally, the Debtors question the September 14, 1981, date as the date when taxes were assessed. The Debtors claim that the April 23, 1979, date is the true date of tax assessment and thus the claim is for assessed prepetition taxes and must be denied priority status and treated as a general unsecured claim under Rule 13-302.
The Court first addresses the principal argument of the Government. The Government places its reliance on 11 U.S.C. § 1305(a)(1) and argues that the taxes in the instant case did not become payable until after the September 14, 1981, assessment. The pertinent portions of 11 U.S.C. § 1305 read as follows:
Again, the Court reiterates that it cannot understand from where the September 14, 1981, date was obtained. The intended significance of the date must be, however, that since this date was after the filing of the Petition on October 3, 1980, this tax claim is a postpetition claim.
The major shortcoming in the Government's analysis is the fact that the Proof of Claim, No. 5, filed by the IRS gives the date of assessment as April 23, 1979. The problem, of course, depending on the significance attached to the "date of assessment," is that it would appear that this date makes the claim a prepetition, rather than a postpetition claim, and section 1305, which concerns only postpetition claims, is, thus, of no help to the Government.
The significance of the phrase "date of assessment" is a sub-issue which must be addressed before the Court can proceed to the main question. The relationship between "date of assessment," used on the Proof of Claim, and "become payable," used in section 1305, must be determined before it can be ruled, with certainty, that the Government's reliance on section 1305 is misplaced.
"Date of assessment," according to the Senate Financing Committee's views expressed in Senate Report No. 999 at the time of the 1966 amendment to 11 U.S.C. § 17(a)(1), the predecessor of 11 U.S.C. § 523(a)(1), is a well established tax law concept. It is both the earliest time at which the amount of the tax is definitely ascertained, and the earliest time when the IRS may begin collection procedures. "Assessment of tax," according to United States v. Dixieline Financial, Inc., 594 F.2d 1311, 1312 (9th Cir. 1979), "consists of no more than the ascertainment of the amount due and the formal entry of that amount on the books of the secretary."
"Become payable," it appears, has never been interpreted by a Court of record, so reliance is placed upon the tax phrase "legally due and owing," section 17(a)(1) of the Bankruptcy Act, which along with "assessment of tax," should help the Court to properly determine the relevant date for the purposes of this discussion. Senate Report No. 999, supra, indicates that the Senate Financing Committee felt that the phrases "legally due and owing" and "date of assessment" had the same meaning and that "date of assessment" should be substituted for "legally due and owing." "Legally due and owing" was interpreted by the Ninth Circuit Court of Appeals in Pan American Van Lines v. United States, 607 F.2d 1299, 1301 (9th Cir. 1979). The Court of Appeals, relying on I.R.C. § 6151(a), determined that "the tax is due on the date the return is originally due." Accord: Collier on Bankruptcy, 14th Ed., 1A:17.14, at 1614; Matter of DiVicenzo, 20 C.B.C. 393 (Bkrtcy., S.D.N.Y.1979); and In re Bryant, 21 C.B.C. 237 (Bkrtcy., S.D.Ala.1979).
Although the meaning that should be attached to the Government's choice of April 23, 1979 is far from mandated by the various interpretations of these randomly used phrases, a common sense application to the facts of the instant case seems possible. "Earliest time at which the amount of the tax is definitely ascertained," "earliest time when the IRS may begin collection procedures," "ascertainment of amount due," "formal entry of amount due on the books of the secretary," and "due on the date the return is originally due" are all expressions which seem to point to the same conclusion. The 1978 taxes of the Debtor in the instant case became an obligation to the United States on April 15, 1979. Why the Government placed its reliance on the April 23, 1979, date is unclear, but it seems that the IRS should be held to its choice of a date of assessment, and should not be allowed to randomly offer the postpetition date of September 14, 1981. The obligation to the United States accrued on April 15, 1979, therefore, there is no way that the Court can consider this a postpetition claim. 11 U.S.C. § 1305, which speaks to the filing and allowance of postpetition claims, cannot be relied upon by the Government.
A different, and even more perplexing, question would have existed had the Court been forced to determine whether or not the Government might file a late proof of claim when the tax is assessed during the pendency of the case, as the issue was couched in the Government's brief. However, because of its determination that the date of assessment makes this claim prepetition rather than postpetition, the Court need not reach this question.
The Debtors contend that 11 U.S.C. § 501 is the proper Code section for application to the Government's prepetition claim. Section 501 states in relevant part:
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