                  T.C. Summary Opinion 2009-13



                      UNITED STATES TAX COURT



              KATHRYN FRANCES OKULA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17768-07S.             Filed January 28, 2009.



     Kathryn Frances Okula, pro se.

     Chong S. Hong, for respondent.



     GERBER, Judge:   This case was heard pursuant to the

provisions of section 74631 of the Internal Revenue Code in

effect when the petition was filed.   Pursuant to section 7463(b),

the decision to be entered is not reviewable by any other court,

and this opinion shall not be treated as precedent for any other


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                               - 2 -

case.   Respondent moved for summary judgment, and petitioner was

given an opportunity to respond.    This case arose under the

provisions of section 6330, and the sole question is whether

petitioner’s 1998 Federal income tax liability was discharged

during her bankruptcy proceeding.

                            Background

     Petitioner had a self-assessed outstanding and unpaid 1998

income tax liability which respondent proposed to collect by

means of a levy.   Respondent notified petitioner of her right to

a hearing, and petitioner submitted a timely request for a

hearing.   In her request petitioner sought a hearing to assert

that her 1998 income tax liability had been discharged in

bankruptcy and was no longer collectible by respondent.

Petitioner did not challenge the underlying tax liability.

     Petitioner’s 1998 Federal income tax return was due April

15, 1999, and was filed with a balance due.    Thereafter, she

filed a chapter 7 bankruptcy petition on September 21, 2001.     In

accord with bankruptcy procedure petitioner notified every

creditor, including respondent, in writing that she was seeking a

discharge of her obligations to them.    In accord with bankruptcy

procedure each creditor was to notify the bankruptcy court if

they had any objection to the discharge of petitioner’s

obligations.   Respondent did not notify the bankruptcy court of

any objection.
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     On January 2, 2002, the bankruptcy court issued an order

discharging all of petitioner’s dischargeable debts and closing

the bankruptcy proceeding.   Respondent did not appeal the

bankruptcy court’s order, and petitioner believed that her debt

to respondent for her 1998 income tax had been discharged.

     On October 2, 2006, respondent notified petitioner of his

intent to pursue collection of the 1998 tax liability and accrued

interest.   Petitioner timely requested a hearing and asserted

that respondent should not pursue collection because the 1998 tax

liability had been discharged in bankruptcy.    A hearing was held

on June 13, 2007, at which time respondent’s settlement officer

explained to petitioner that her 1998 tax liability had not been

discharged in the bankruptcy because it had priority status under

the Bankruptcy Code.   Petitioner did not otherwise challenge the

merits of the 1998 tax liability or seek alternatives to

collection, such as an offer-in-compromise.    The settlement

officer verified and provided petitioner with all information

required under the provisions of section 6330.

                             Discussion

     Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials.   See Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988).    Summary judgment may be

granted with respect to all or any part of the legal issues in

controversy if there is no genuine issue as to any material fact
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and a decision may be rendered as a matter of law.   Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd.

17 F.3d 965 (7th Cir. 1994).   There is no dispute about the facts

in this case, and the question we consider is a legal one--

whether, as a matter of law, petitioner’s 1998 income tax

obligation was discharged in bankruptcy.

     There are no procedural questions about whether the

settlement officer met the requirements of section 6330(c).    The

question of discharge is determinative of whether there was an

abuse of discretion in deciding to proceed with collection.

Because a discharge order was issued in petitioner’s bankruptcy

proceeding, we have jurisdiction to decide whether petitioner’s

1998 tax liability was discharged under the bankruptcy court’s

order.    See Swanson v. Commissioner, 121 T.C. 111, 117-118

(2003).

     We review respondent’s determination that, under 11 U.S.C.

sec. 523(a)(1)(B)(i) (2006), petitioner’s unpaid income tax

liability was not discharged in bankruptcy.   Additionally, we

address petitioner’s contentions that respondent made no

challenge to petitioner’s discharge order issued by the

bankruptcy court.

     Petitioner’s discharge order does not specifically state

which of her debts have been discharged.   Instead, it outlines

which debts are not discharged.   One of the debts that is listed
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as generally not dischargeable is “Debts for most taxes”.      The

general rule is that a debtor who files a chapter 7 bankruptcy

petition is discharged from personal liability for all debts

incurred before the filing of the petition.    11 U.S.C. sec.

727(b) (2006); United States v. Hatton, 220 F.3d 1057, 1059-1060

(9th Cir. 2000).   However, an individual debtor is not to be

discharged in a bankruptcy proceeding from certain specified

categories of debts.   11 U.S.C. sec. 523(a); Washington v.

Commissioner, 120 T.C. 114, 121 (2003).

      The first such category that is specifically excepted from

the discharge provisions includes taxes described as priority

claims in 11 U.S.C. sec. 507(a)(8) (2006).    11 U.S.C. sec.

523(a)(1)(A); Severo v. Commissioner, 129 T.C. 160 (2007).       With

respect to claims for income tax due for a tax year in which the

due date for the return is within 3 years of the filing of the

petition in bankruptcy, they are defined as priority claims.      See

11 U.S.C. sec. 507(a)(8)(A)(i).

     Petitioner’s 1998 income tax return was due, without

considering any extensions, on April 15, 1999.    Petitioner’s

bankruptcy case was commenced September 21, 2001, a date that is

less than 3 years from the due date of petitioner’s 1998 income

tax return.   Accordingly, petitioner’s 1998 income tax liability

falls within the statutory exception so as ordinarily not to be
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discharged by a general order of discharge by a bankruptcy court.

Severo v. Commissioner, supra at 166.

     Petitioner, however, also contends that she notified

respondent that she was seeking discharge of the 1998 tax

liability and respondent did not object or otherwise take any

action with respect to petitioner’s notice.    Petitioner contends

that any priority that respondent may have had would be obviated

by the failure to notify petitioner of respondent’s priority

status or to object.

     This issue has been considered by this Court, and we have

held that the Commissioner’s failure to take action in the

bankruptcy proceeding does not, per se, affect the statutory

priority afforded to tax debts.   Therefore, if a tax liability

satisfies the conditions set forth in 11 U.S.C. sec. 523(a)(1),

it is not protected by the general discharge received by a

taxpayer in his prior bankruptcy case.   Swanson v. Commissioner,

supra at 126.

     Petitioner was under the impression that her discharge in

bankruptcy had eliminated all of her debt.    She was surprised

4 years later when respondent advised that collection of the 1998

liability was being pursued.   Although we can sympathize with

petitioner, she remains obligated for the 1998 tax liability.
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Accordingly, there was no abuse of discretion when respondent

determined to proceed with collection over petitioner’s

objection.

     In view of the foregoing, respondent’s motion for summary

judgment will be granted.


                                           An appropriate order and

                                      decision will be entered.
