In Uncategorized on 06/21/2019 at 17:40

We all know that Settles settled the question whether a petition from a CDP could be dismissed without entry of decision for IRS. See my blogpost “Dismissed!” 5/8/12. But today STJ Lewis (“The Name”) Carluzzo has an unsettling variation on the Settles theme (sorry, guys and Judge Posner).

Here’s a Friday designated hitter, Matthew D. Betters, Docket No. 8386-17L, filed 6/21/19.

Matt is a convert to Ch 7 bankruptcy, and claims IRS has filed a proof of claim, which will be completely paid in the bankruptcy proceeding. So dismiss the petition.

No, says STJ Lew. Tom Settles had litigated his bœuf with IRS to a finish, but Matt’s claim hasn‘t yet been adjudicated.

“The parties recognize that unlike the situation in Settles, the bankruptcy court in petitioner’s related bankruptcy proceeding has not yet adjudicated respondent’s claim with respect to petitioner’s 2014 and 2015 Federal income tax liabilities. That distinction is meaningful and constrains us to disagree with respect to the parties’ position that petitioner’s motion may, and should, now be granted.” Order, at p. 3.

Even though the parties are happy, the Bankruptcy Court still has the final word. But there is a way out.

“Either party, of course, can apply to the bankruptcy court for an order that modifies the automatic stay to allow the Court to dismiss this case or allow other appropriate relief related to this proceeding. See11U.S.C.§362(d)(1). Until then, or until the bankruptcy court adjudicates petitioner’s 2014 and 2015 Federal income tax liabilities, the relief sought in petitioner’s motion is unavailable.” Order, at p. 3.




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