No. SA 95-16904 LRUnited States Bankruptcy Court, C.D. California, Santa Ana Division
October 22, 1999
FINDINGS ON MOTION TO AMEND JUDGMENT, AND ORDER AMENDING JUDGMENT
MARIA-LUISA Q. PARCON, United States Bankruptcy Judge
The motion of the United States to amend the Court’s Memorandum of Decision Sustaining and overruling Debtor’s objections to the IRS’s Proof of Claim, entered by the Court on May 21, 1999, came on for hearing before the Court on October 20, 1999. The United States appeared through Assistant United States Attorney Darwin Thomas and the debtor appeared through his counsel of record, Fritz J. Firman. Based on all pleadings filed in this matter, on the argument of counsel at the hearing, and on all matters properly part of the record in this proceeding, the court makes the following findings of fact and conclusions of law.
The debtor’s federal income tax return for the year 1990 was filed no earlier than the original due date of April 15, 1991, because even if the return was submitted before the original due date, it is deemed filed on the due date. 26 U.S.C. § 6501(b)(1).
The petition in the instant case was filed on July 7, 1995, After the April 15, 1991 filing date for the debtor’s 1990 income tax return, and prior to the petition date in this case, the debtor filed three bankruptcy cases as follows:
A) No. SAX 93-12764, a Chapter 7 case, was filed on March 17, 1993, and a discharge order was entered on July 23, 1993. The automatic stay under 11 U.S.C. § 362 was in effect in case no. SAX 93-12764 from the petition date through the date of entry of the discharge order.
B) No. SAX 94-14523, a Chapter 13 case, was filed on May 3, 1994, and was dismissed on July 28, 1994. The automatic stay under 11 U.S.C. § 362 was in effect in case no. SAX 94-14532 from the petition date through the date of the dismissal.
C) No. SAX 94-18384, a Chapter 13 case, was filed on August 16, 1994, and was dismissed on April 27, 1995. The automatic stay under 13. U.S.C. § 362 was in effect in case no. SAX 94-18384 from the petition date through the date of the dismissal.
In West v. United States, 5 F.3d 423 (9th Cir. 1993), the Ninth Circuit held that the time periods specified in 11 U.S.C. § 507(a)(8)(A) are tolled during the time when the automatic stay is in effect in a bankruptcy case filed by the taxpayer, and for six months after the stay is lifted. See also In re Brickley, 70 B.R. 113 (Bankr. 9th Cir. 1986). This tolling provision is therefore applicable for the purposes of determining whether a claim is a priority claim under § 507(a)(8), and whether a debt is excepted from discharge under § 523(a)(1). The tolling provision is derived from the Internal Revenue Code, and it is applied in the bankruptcy context because Bankruptcy Code section 523(a)(1) is intended to allow the IRS a three year collection period for income taxes, unimpaired by the bankruptcy automatic stay.
Based on the above findings, with respect to the debtor’s 1990 income tax liability this Court finds that when the debtor filed case No. SAX 93-12764 on March 17, 1993, only 1 year, 11 months, and 2 days of the three year “lookback” period set forth in § 507(a)(8)(A)(i) had expired, i.e., the period from the filing of the debtor’s 1990 tax return on April 15, 1991, through the petition date of March 17, 1993. The running of the three year period was then tolled until six months after the entry of the discharge in case No. SAX 93-12764. Since that discharge was entered on July 23, 1993, the running of the three year lookback period was tolled until January 23, 1994, or six months after the entry of the discharge order. The three year lookback period therefore began running again on January 23, 1994, and continued to run until the debtor filed case No. SAX 94-14523 on May 3, 1994, which is a period of 3 months and 10 days. Therefore, when the debtor filed case No. SAX 94-14523 on May 3, 1994, a total of 2 years, 2 months, and 12 days of the three year lookback period had expired, that being the sum of 1 year, 11 months, and 2 days, plus 3 months, and 10 days.
The running of the three year lookback period would have again begun to run six months after case No. SAX 94-14523 was dismissed. Since the dismissal occurred on July 28, 1994, the three year period would have begun to run again on January 28, 1995. However, on August 16, 1994, the debtor filed case No. SAX 94-18384 and the automatic stay again came into effect until that case was dismissed on April 27, 1995. Therefore, the three year lookback period would not have commenced running again until October 27, 1995, which was six months after the dismissal of case No. SAX 94-18384. However, before that six month period had passed the debtor again filed another bankruptcy case, the instant case, which he filed on July 7, 1995. Therefore, when the instant case was filed only 2 years, 2 months, and 12 days of the three year lookback period provided for in § 507(a)(8)(A)(i) had expired.
Based on the above analysis this Court finds that, with respect to the debtor’s 1990 federal income tax liability, the 3 year lookback period set forth in 507(a)(8)(A)(i) had not expired at the time the instant bankruptcy case was filed. The Court therefore finds that the debt for such tax liability is a priority claim in this bankruptcy case, and that such debt is excepted from discharge under 11 U.S.C. § 523(a)(1)(A). It is therefore,
ORDERED that this Court’s Memorandum of Decision sustaining and overruling Debtor’s objections to the IRS’s Proof of Claim, entered by the Court on May 21, 1999, is amended by deleting those findings and conclusions in the May 21, 1999, decision that are inconsistent with the findings and conclusions set forth above. It is further ADJUDGED that the debtor’s 1990 federal income tax liability is a priority claim in this bankruptcy case and is a debt excepted from discharge in this bankruptcy case.
PROOF OF SERVICE
I am over the age of 18 and not a party to the within action. E am employed by the Office of the United States Attorney, Central District of California. My business address is 300 North Los Angeles Street, Suite 7211, Los Angeles, California 90012.
On October 22, 1999, I served Findings on Motion to Amend Judgment, and Order Amending Judgment on each person or entity named below by enclosing a copy in an envelope addressed as shown below and placing the envelope for collection and mailing on the date and at the place shown below following our ordinary office practices. I am readily familiar with the practice of this office for collection and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid.
Date of mailing: October 22, 1999. Place of mailing: Los Angeles, California.
See attached Service List
I declare under penalty of perjury under the laws of the United States of America that the foregoing if true and correct. I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made.
Executed on: October 22, 1999 at Los Angeles, California.