In re Perkins
| Decision Date | 10 October 1997 |
| Docket Number | Bankruptcy No. 96-12015,Adversary No. 96-1104. |
| Citation | 216 BR 220 |
| Parties | In re Glenda PERKINS, Debtor. Glenda PERKINS, Plaintiff, v. UNITED STATES of America, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
Roger O. Reyes, Cincinnati, OH, for Plaintiff.
Terra Serena, Sp. Asst. U.S. Atty., Cincinnati, OH, for Defendants.
DECISION ON CROSS MOTIONS FOR SUMMARY JUDGMENT
Before the Court in this Chapter 7 adversary case to determine dischargeability of a debt under 11 U.S.C. § 523(a) are cross motions for summary judgment. In essence, the Court is being asked to decide whether nonassessed 1992 federal taxes are dischargeable in these proceedings. In addition, we must decide whether the United States is required to reimburse Debtor $1,170 for a 1993 earned income credit that had been offset by the Internal Revenue Service ("IRS") to repay a joint tax liability for the 1989 tax year.1
The parties agree that with respect to the dischargeability of Debtor's 1992 taxes, the Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the General Order of Reference entered in this District. This issue is a core proceeding which the Court is empowered to hear and determine in accordance with 28 U.S.C. § 157(b)(2)(I).
However, the IRS argues that this Court lacks subject matter jurisdiction to consider whether Debtor is entitled to a refund of her 1993 earned income credit. We address the jurisdiction issue in the later portions of this opinion.
A motion for summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c), made applicable in bankruptcy by Fed. R. Bankr.P. 7056. The moving party bears the initial burden of showing that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-324, 106 S.Ct. 2548, 2552-2553, 91 L.Ed.2d 265 (1986).
The standards the court must use to evaluate motions for summary judgment are no different when the parties submit cross-motions. Taft Broadcasting v. United States, 929 F.2d 240, 248 (6th Cir.1991). Submission of cross-motions for summary judgment does not necessarily result in the court granting summary judgment to one of the parties. Id. The court must review the evidence for genuine issues of material fact and "evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Id. (quoting Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed.Cir.1987)).
On April 23, 1996, the Debtor filed a Chapter 7 petition seeking a discharge of unsecured debts. On May 21, 1996, Debtor filed a Complaint to Determine Dischargeability of 1989, 1990 and 1992 Tax Liabilities ("Complaint"). Debtor amended her Complaint on June 24, 1996, ("Amended Complaint") to assert that in 1994 the IRS "wrongfully took Plaintiff's refund for 1993 to apply it to a tax obligation for which she was not responsible and which was not predicated on her social security number because she did not make any income for the year 1989." Debtor requests that the IRS be ordered to return this earned income credit to her.
In its Answer to the Complaint and Amended Complaint, the IRS admits that Debtor's taxes for the years 1989 and 1990 are dischargeable. However, the IRS has been unable to determine what Debtor's 1992 tax liability is since Debtor has yet to file a tax return for that year. In its Amended Answer, the IRS denies that Debtor is entitled to a refund of $1,170 for the 1993 earned income credit which had been applied by the IRS towards payment of the Debtor's and her ex-spouse's 1989 joint tax liability. At a pretrial conference held August 16, 1996, the parties reached a partial settlement agreeing that any remaining taxes for 1989 and 1990 are dischargeable. An order memorializing the terms of that agreement was entered October 31, 1996. Also, in the scheduling order, Debtor and the IRS agreed that Debtor would provide the IRS with an affidavit stating that her income for the 1992 tax year was below the threshold required for filing a return. Based on the submission of that affidavit the IRS agreed not to assert a claim for 1992 taxes against Debtor. Finally, the parties agreed that the sole issue left for determination was whether Debtor is entitled to a refund of her 1993 earned income credit.
After the Scheduling Order was entered, the parties were unable to agree on the language to be included in an agreed order relative to the dischargeability of Debtor's 1992 tax liability.2 Hence, that issue is also before the Court for determination.
The material facts in this case are not in dispute. Debtor was separated from her ex-husband, Mr. Gregg Giacci, in late 1992. Consequently, Debtor did not sign a 1992 tax return submitted by him to the IRS. In an Affidavit attached to Plaintiff's motion for summary judgment, Debtor states that her total income for 1992 was $1,557.26. Debtor further asserts that she did not file a 1992 federal income tax return since she "was instructed on page 6 of the 1992 IRS' 1040A form and instruction booklet that she was not required to file a federal tax return if her income was under $7,550.00." However, Debtor takes the position that the IRS must discharge her from all potential 1992 tax liability even though no return was filed and even if additional information surfaces later indicating that a return should have been filed based on the discovery of unreported income.
The IRS counters by claiming, in essence, that Debtor's complaint and motion for summary judgment are frivolous. Based on Debtor's Affidavit testimony that her 1992 income was only $1,557.26, the IRS concedes that Debtor was not obligated to file a 1992 tax return. At that level of income the IRS also concedes that Debtor would not have any tax liability for 1992. However, the IRS states:
This does not mean, however, that a debt could not arise if, for example, the debtor voluntarily files a 1992 income tax return at some later date which establishes a liability, or if the Internal Revenue Service discovers unreported income for this particular year and taxpayer.
Accordingly, the IRS is unwilling to accede to Debtor's demand that any 1992 tax liability — including that based on income she may have received during 1992 which the Service may not currently be aware of — is dischargeable.
The parties' disagreement regarding the offset of joint 1989 tax liability against Debtor's 1993 earned income credit also remains at issue. Principally, Debtor seeks reimbursement from the IRS of $1,170 which she had claimed as an earned credit for the 1993 tax year. The IRS strongly contests this assertion. Debtor's reply reiterates her challenge to the legality of the IRS offset.
Debtor contends that during the years 1989 and 1990 she was a housewife and did not work or earn her own income. Debtor iterates that "she just signed the joint returns submitted by her ex-husband for the years in question." Further, the Debtor asserts that the separation agreement signed by her ex-husband requires him to repay the parties' taxes due the IRS for each of the years that they were married. Lastly, Debtor maintains that the parties' separation agreement holds her harmless from any collection activity on those debts by the IRS. Based on these assertions, Debtor argues that she had no tax obligation for 1989 against which her 1993 earned income credit should have been offset by the IRS during 1994.
Debtor vigorously maintains that the IRS should also be bound by the terms of the separation agreement between Debtor and her ex-husband and that the actions of the IRS were unfair. Although she refers to the separation agreement numerous times, Debtor failed to produce a copy of that document for the Court's consideration. Finally, other than alluding to the inequities of the situation, Debtor fails to cite any authority for her contention that the actions taken by the IRS in collecting a portion of the 1989 taxes from her rather than pursuing Mr. Giacci directly was illegal.
It is interesting to note with respect to the 1993 Earned Credit Issue, Debtor apparently realizes her remedy in this matter is an action against her ex-husband. On June 24, 1994, Debtor filed a Motion for Relief from Judgment and for Contempt against Mr. Giacci in the Butler County, Ohio, Court of Common Pleas. In that motion, Debtor requests the state court to order Mr. Giacci to reimburse Debtor $1,170 as a result of the IRS' offset of her 1993 earned income credit. Debtor also contends that her ex-husband violated the terms of their separation agreement, which provided that she would be held harmless for any taxes incurred during their marriage. Debtor offers no information about the results from that state court action or whether the monetary relief sought has been obtained.3
The IRS admits that on or about April 15, 1994, it offset Debtor's 1993 earned income credit against the 1989 joint tax liability of Debtor and Mr. Giacci4 but asserts that the bankruptcy court is without jurisdiction to hear this matter. In making that argument, the IRS contends that the separation agreement between Debtor and Mr. Giacci is not binding on the IRS, and that since Debtor and Mr. Giacci filed a joint tax return in 1989, both parties are jointly and severally liable for the tax obligation. Taking these issues in the order in which they have been presented, we first examine whether all Debtor's potential tax liability for 1992 is dischargeable.
The Court is truly...
To continue reading
Request your trial