                  T.C. Memo. 2010-160



                UNITED STATES TAX COURT



           H. RICHARD SHUTTS, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 6322-04.               Filed July 26, 2010.



     On Mar. 22, 2005, P and R reached a basis of
settlement in a deficiency case. Two days later, P
filed for bankruptcy. On Apr. 12, 2005, during the
pendency of the bankruptcy action, this Court entered
decision pursuant to the parties’ agreement. R now
files a motion for leave to file a motion to vacate and
lodges a motion to vacate. P objects to the granting
of the motion.

     Held: The Apr. 12, 2005 decision is void because
it was entered in violation of the automatic stay of 11
U.S.C. sec. 362(a)(8) (2000). R’s motion for leave and
R’s motion to vacate shall both be granted.



H. Richard Shutts, pro se.

Lisa M. Oshiro, for respondent.
                               - 2 -

                       MEMORANDUM OPINION


     ARMEN, Special Trial Judge:   This matter is before the Court

on respondent’s motion for leave to file a motion under Rule 162

to vacate the stipulated decision entered on April 12, 2005, and

now final under section 7481(a)(1).1     At issue is whether the

Court lacked jurisdiction to enter the stipulated decision

because petitioner had filed a petition in bankruptcy on March

24, 2005, giving rise to the automatic stay imposed by 11 U.S.C.

section 362(a)(8) (2000).

                            Background

     Petitioner resided in the State of Idaho when the petition

was filed on April 12, 2004.

     On March 22, 2005, petitioner and respondent’s Appeals

Office reached a basis of settlement.     Thereafter, petitioner’s

then-attorney and counsel for respondent signed the stipulated

decision, which decision was entered by the Court on April 12,

2005.

     On March 24, 2005, just 2 days after the basis of settlement

had been reached, but before the stipulated decision had been

signed by counsel for the parties and entered by the Court,

petitioner filed a petition in bankruptcy under chapter 7 of the



     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
                                - 3 -

Bankruptcy Code.2    The bankruptcy court issued a discharge on

July 13, 2005.

     As stated above, respondent filed the Motion For Leave To

File Respondent’s Motion To Vacate Decision Out Of Time on

February 26, 2010.    On that same day respondent also lodged a

Motion To Vacate Decision.

     In response to an Order of the Court dated March 8, 2010,

petitioner filed an Objection to respondent’s motion for leave on

April 7, 2010.   Petitioner concurrently has a case pending before

the Court that is the collection action that commenced upon entry

of the decision in the present case.      Petitioner objects to the

granting of the motion for leave in this case on the grounds that

the motion was filed in the wrong action and that resolution of

the collection case would render the motion moot.

                             Discussion

     Respondent desires to file a motion to vacate the stipulated

decision entered on April 12, 2005.     Because neither party filed

a notice of appeal or a timely motion to vacate or revise that

decision, it became final on July 11, 2005, 90 days after it was

entered.   See secs. 7459(c), 7481(a)(1).




     2
        Presumably, neither petitioner’s tax counsel    nor counsel
for respondent was aware of the bankruptcy filing at    the time
that the stipulated decision was entered. The Court     was first
advised of that matter by respondent upon the filing    of his
motion for leave.
                                 - 4 -

     Rule 162 provides that a party seeking to vacate a decision

must file an appropriate motion within 30 days after the decision

is entered, unless the Court allows otherwise.    Because

respondent did not file his motion to vacate within the 30-day

period, respondent has requested leave from the Court to file

that motion at this time.

     The disposition of a motion for leave to file a motion to

vacate or revise a decision lies within the sound discretion of

the Court.   See Heim v. Commissioner, 872 F.2d 245, 246 (8th Cir.

1989), affg. T.C. Memo. 1987-1; see also Toscano v. Commissioner,

441 F.2d 930, 938 (9th Cir. 1991) (Byrne, J., dissenting),

vacating 52 T.C. 295 (1969); Commissioner v. Estate of Long, 304

F.2d 136, 144 (9th Cir. 1962).     Where a party legitimately

challenges the jurisdiction of this Court, however, the Court

should freely exercise that discretion, notwithstanding the time

of the challenge and even if the decision under attack is

otherwise final.   See Brannon’s of Shawnee, Inc. v. Commissioner,

69 T.C. 999, 1002 (1978).

     The Court has jurisdiction to vacate a decision that is

void, Abeles v. Commissioner, 90 T.C. 103, 105-106 (1988), which

naturally means that the Court also has jurisdiction to grant a

motion for leave to file a motion to vacate a void decision,

Adkins v. Commissioner, T.C. Memo. 2005-260.     Under the present
                                 - 5 -

setting, we shall grant respondent’s motion for leave to file

respondent’s motion to vacate.

     We now turn to respondent’s motion to vacate.   Once a

decision of this Court becomes final, we may vacate the decision

only in certain narrowly-circumscribed situations.   See Helvering

v. N. Coal Co., 293 U.S. 191 (1934); Drobny v. Commissioner, 113

F.3d 670, 677 (7th Cir. 1997), affg. T.C. Memo. 1995-209; Curtis

v. Commissioner, T.C. Memo. 1996-371.    The Courts of Appeals have

consistently held that the Tax Court lacks the authority to

vacate or revise an otherwise final decision on grounds such as

newly-discovered evidence or excusable neglect.    Abatti v.

Commissioner, 859 F.2d 115, 117-118 (9th Cir. 1988), affg. 86

T.C. 1319 (1986).   The Courts of Appeals have generally allowed

an exception to the usual rule of finality of section 7481 for

fraud on the Court.   Id. at 118.   In addition, the Courts of

Appeals, and in particular the Court of Appeals for the Ninth

Circuit, the court to which this case is appealable, has held

that the Tax Court may vacate a final decision if that decision

is shown to be void, or a legal nullity, for lack of jurisdiction

over the subject matter.   Billingsley v. Commissioner, 868 F.2d

1081 (9th Cir. 1989); see also Roberts v. Commissioner, 175 F.3d

889, 892 n.3 (11th Cir. 1999).
                               - 6 -

     In the present case, respondent contends that the decision

entered on April 12, 2005, is void because it was entered in

violation of the automatic stay of 11 U.S.C. section 362(a)(8).

     A bankruptcy filing generally triggers an automatic stay of

Tax Court proceedings concerning the debtor.   Actions that are

subject to the automatic stay are set forth in 11 U.S.C. section

362(a).   At the time petitioner filed for bankruptcy, 11 U.S.C.

section 362(a) provided in relevant part:

     § 362.   Automatic stay

          (a) Except as provided in subsection (b) of this
     section, a petition filed under section 301, 302, or
     303 of this title, or an application filed under
     section 5(a)(3) of the Securities Investor Protection
     Act of 1970, operates as a stay, applicable to all
     entities of--

                *    *    *    *       *   *   *

          (8) the commencement or continuation of a
     proceeding before the United States Tax Court
     concerning the debtor.[3]

     The automatic stay generally operates to temporarily bar

actions against or concerning the debtor or property of the


     3
        The Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005, Pub. L. 109-8, sec. 709, 119 Stat. 127, amended sec.
362(a)(8) of the Bankruptcy Code by striking out “the debtor” and
inserting “a corporate debtor’s tax liability for a taxable
period the bankruptcy court may determine or concerning the tax
liability of a debtor who is an individual for a taxable period
ending before the date of the order for relief under this title”.
This provision became effective with respect to petitions for
relief under the Bankruptcy Code filed on or after Oct. 17, 2005.
See id. sec. 1501, 119 Stat. 216. Because petitioner filed his
bankruptcy case on Mar. 24, 2005, this amendment does not apply
here.
                                - 7 -

debtor or the bankruptcy estate.    Allison v. Commissioner, 97

T.C. 544, 545 (1991).    In a chapter 7 bankruptcy, such as that of

petitioner, and as applicable here, an automatic stay is

generally lifted only at “the time a discharge is granted or

denied.”   11 U.S.C. sec. 362(c)(2)(C) (2000).

     The Court of Appeals for the Ninth Circuit has stated that

actions in violation of the automatic stay are void and not

merely voidable.    Schwartz v. United States, 954 F.2d 569, 571

(9th Cir. 1992); see also Stringer v. Huet, 847 F.2d 549, 551

(9th Cir. 1988).    One of those actions is the “continuation of a

proceeding before the United States Tax Court concerning the

debtor”.   11 U.S.C. sec. 362(a)(8) (2000).

     Petitioner filed his Tax Court petition on April 12, 2004.

On March 24, 2005, petitioner filed a petition in bankruptcy,

which temporarily barred the continuation of petitioner’s pending

Tax Court case.    See 11 U.S.C. sec. 362(a)(8).   Petitioner was

granted a discharge on July 13, 2005, bringing to an end the

automatic stay.    See id. sec. 362(c)(2)(C).    But the stipulated

decision was entered on April 12, 2005, during the period of time

that the automatic stay was in effect.    Thus, the entering of the

decision violated the automatic stay, and that decision is,

therefore, void.    Given that the stipulated decision is void, we

shall grant respondent’s motion to vacate the decision.
                                 - 8 -

                           Conclusion

     Finally, in reaching the conclusions described herein, we

have considered all arguments made by petitioner, and, to the

extent not mentioned above, we find them to be moot, irrelevant,

or without merit.

     To reflect the foregoing,


                                              An appropriate order will

                                         be issued.
