                           T.C. Memo. 2003-154



                         UNITED STATES TAX COURT



                LOTTIE TYLER RICHARDSON, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 6096-02L.               Filed May 28, 2003.


        Lottie Tyler Richardson, pro se.

        Jeffrey E. Gold, for respondent.



                           MEMORANDUM OPINION


        MARVEL, Judge:   This matter is before the Court on

respondent’s motion for summary judgment filed pursuant to Rule

121.1


        1
      All section references are to the Internal Revenue Code in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure. Monetary amounts are
rounded to the nearest dollar.
                               - 2 -

     Summary judgment is a procedure designed to expedite

litigation and avoid unnecessary, time-consuming, and expensive

trials.   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 presented “if the pleadings, answers

to interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law.”   Rule 121(a) and

(b); see Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520

(1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v.

Commissioner, 90 T.C. 753, 754 (1988).   The moving party bears

the burden of proving that there is no genuine issue of material

fact, and factual inferences will be read in a manner most

favorable to the party opposing summary judgment.   Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985).   The facts material to the

Court’s disposition of the motion for summary judgment are stated

solely for purposes of deciding the motion and are not findings

of fact for this case.   See Sundstrand Corp. v. Commissioner,

supra at 520.

                            Background

Petitioner’s 1995 and 1996 Income Tax Liabilities

     On March 27, 1997, and June 5, 1997, petitioner filed her

Federal income tax returns for 1995 and 1996, respectively.    Due
                                - 3 -

to petitioner’s failure to pay the income tax balances due, on

July 7, 1997, respondent assessed the income tax shown on the

returns and additions to tax for petitioner’s 1995 and 1996

taxable years:

                                    Additions to tax--secs.
     Year        Income tax      6651(a)(1) 16651(a)(2) 6654

     1995          $2,786          $486        $162     $114
     1996           2,936           198          33      113
     1
      On Sept 29, 1997, this penalty was abated by $54 for 1995
and by $33 for 1996.

Additionally, on July 7, 1997, respondent mailed petitioner

notices of balance due for 1995 and 1996.

     On March 15, 1999, and again on July 24, 2000, respondent

mailed petitioner notices of intent to levy.   On April 11, 2001,

respondent filed a Notice of Federal Tax Lien for the 1995 and

1996 income tax liabilities and, on April 16, 2001, sent

petitioner a Notice of Federal Tax Lien Filing as required by

section 6320.    Petitioner mailed respondent a timely Form 12153,

Request for a Collection Due Process Hearing, on May 9, 2001.     On

the Form 12153, petitioner claimed that she had experienced

“financial hardship” during the taxable years 1995 and 1996 and

that there was a “discrepancy” in her income tax liabilities for

those years.    Petitioner also noted that she had filed a chapter

7 bankruptcy petition that covered the taxable year 1993.
                               - 4 -

Petitioner’s Bankruptcy Proceedings

     On January 28, 1997, petitioner filed a chapter 13

bankruptcy petition.   The Bankruptcy Court dismissed her case on

March 11, 1999, pursuant to petitioner’s request for a conversion

of her petition.   On July 27, 1999, petitioner filed a chapter 7

bankruptcy petition.   Schedule E of petitioner’s chapter 7

petition listed income tax liabilities for the taxable years 1991

through 1996, totaling $15,876, as unsecured priority claims.   On

November 1, 1999, the Bankruptcy Court granted petitioner a

discharge under 11 U.S.C. sec. 727 (2000).

Petitioner’s Hearing and the Notice of Determination

     At the section 6320/6330 hearing on November 29, 2001,

petitioner asserted that the chapter 7 bankruptcy discharge

absolved her of the 1995 and 1996 income tax liabilities.

Petitioner did not present evidence of the alleged “financial

hardship” or of the “discrepancies” in the liability amounts.

Petitioner did not raise any spousal defenses, collection

alternatives, or other challenges to the collection action.

     After reviewing petitioner’s 1995 and 1996 account

transcripts and documentation of her bankruptcy proceedings, the

Appeals officer determined that the chapter 7 bankruptcy

discharge had no effect on her 1995 and 1996 income tax

liabilities.   The Appeals officer gave petitioner Forms 656,

Offer in Compromise, and 433-A, Collection Information Statement
                                - 5 -

for Individuals, suggesting that petitioner submit an offer in

compromise on or before December 29, 2001.    Petitioner failed to

submit the forms before the December 29, 2001, deadline.

     Respondent mailed petitioner a notice of determination

concerning collection action(s) under section 6320 and/or section

6330 (notice of determination), dated February 19, 2002,

determining that the filing of the tax lien was an appropriate

enforcement action.

Petitioner’s Petition

     Petitioner filed a timely petition contesting respondent’s

notice of determination on March 15, 2002.2   Although

respondent’s notice of determination dealt solely with

petitioner’s income tax liabilities for the taxable years 1995

and 1996, petitioner disputed her income tax liabilities for 1993

through 1996 in her petition.    On May 8, 2002, respondent filed a

Motion to Dismiss for Lack of Jurisdiction and to Strike As to

Taxable Years 1993 and 1994.    This Court granted respondent’s

motion by order dated June 12, 2002, dismissing the case as to

the taxable years 1993 and 1994 and striking references to those

years from the petition.

     After the 1993 and 1994 references were stricken,

petitioner’s two remaining allegations are that she paid “over


     2
      At the time she filed the petition, petitioner resided in
Clinton, Md.
                               - 6 -

$4,000" to the IRS in connection with the chapter 13 bankruptcy

proceeding and that the chapter 7 bankruptcy discharge absolved

her of her 1995 and 1996 income tax liabilities.

Respondent’s Answer and Motion for Summary Judgment

     In his answer, filed June 24, 2002, respondent denied all of

petitioner’s allegations and alleged further that no payments

from petitioner’s chapter 13 bankruptcy proceeding were applied

to petitioner’s 1995 and 1996 income tax liabilities.

     On September 3, 2002, respondent filed a motion for summary

judgment.   In his motion, respondent asserts that there is no

genuine issue as to any material fact and that respondent is

entitled to a decision as a matter of law.   Respondent maintains

that petitioner failed to make assignments of error regarding the

$4,000 payment from petitioner’s chapter 13 bankruptcy

proceeding, that petitioner’s chapter 7 bankruptcy discharge did

not cover petitioner’s 1995 and 1996 income tax liabilities, and

that the Appeals officer’s determination was not an abuse of

discretion.

     On October 16, 2002, petitioner filed an objection to

respondent’s motion for summary judgment, stating that petitioner

disagreed with “the amount owed to the IRS.”   The Court held a

hearing on the motion for summary judgment at the Court’s motion
                               - 7 -

session in Washington, D.C., on November 6, 2002.    Petitioner and

respondent both appeared at the hearing and presented their

positions with respect to the tax lien filed against petitioner.

                            Discussion

     All property and rights to property of a taxpayer become

subject to a lien in favor of the United States on the date a tax

liability is assessed against the taxpayer, if the taxpayer fails

to meet the Commissioner’s demand for payment of her tax

liability.   Secs. 6321 and 6322.   Until a Notice of Federal Tax

Lien is filed, a lien is without validity and priority against

certain persons such as judgment lien creditors of the taxpayer.

Sec. 6323(a).   After the Secretary files the Notice of Federal

Tax Lien, the Secretary must provide the taxpayer with written

notice of the filing, informing the taxpayer of her right to

request an administrative hearing on the matter.    Sec.

6320(a)(1), (3)(B).   Section 6320(c) requires that the

administrative hearing be conducted pursuant to section 6330(c),

(d), and (e).   Following the hearing, the hearing officer is

required to issue a notice of determination regarding the

disputed Notice of Federal Tax Lien.     If the taxpayer disagrees

with the hearing officer’s determination, the taxpayer has the

right to seek judicial review of the Appeals officer’s

determination by appealing to this Court or, if this Court lacks

jurisdiction over the underlying tax liability, to the proper
                                 - 8 -

Federal District Court.     Sec. 6330(d).

         The sole argument on which petitioner continues to rely is

that her 1995 and 1996 income tax liabilities were discharged in

bankruptcy.3    Specifically, petitioner claims that the chapter 7

bankruptcy discharge relieved her of the 1995 and 1996 income tax

liabilities.    Respondent contends that petitioner’s 1995 and 1996

income tax liabilities are excepted from discharge by provisions

of the Bankruptcy Code.    For the reasons discussed below, we

conclude that respondent’s determination upholding the Federal

tax lien filing must be sustained.

Jurisdiction To Decide Dischargeability Issue

     We have often held in deficiency proceedings under section

6213 that we lack jurisdiction to decide whether a tax liability

has been discharged in bankruptcy.       See, e.g., Nielson v.

Commissioner, 94 T.C. 1, 8-9 (1990); Graham v. Commissioner, 75

T.C. 389 (1980).     However, this case is a lien proceeding that

arose under sections 6320 and 6330.      Recently, we held in

Washington v. Commissioner, 120 T.C. 114, 121 (2003), that in

such lien proceedings we have jurisdiction to decide whether

     3
      The issue of petitioner’s $4,000 payment in connection with
the chapter 13 bankruptcy proceeding is not related to her 1995
and 1996 income tax liabilities and, therefore, is not properly
before the Court.
     In addition, petitioner testified at the Nov. 6, 2002,
hearing that respondent had given her transcripts of her accounts
for each of the years 1993-96, and she conceded that the
transcripts showed the $4,000 payment was applied to her tax
liabilities for other years.
                               - 9 -

unpaid income tax liabilities have been discharged in

bankruptcy.4

Petitioner’s 1996 Income Tax Liability

     Section 523 of the Bankruptcy Code provides some exceptions

to the discharge of debts in bankruptcy.   See 11 U.S.C. sec. 523

(2000).   Subsection (a)(1)(A) excepts from discharge taxes within

the “three-year lookback period” (the lookback period) described

in section 507(a)(8) of the Bankruptcy Code.   The lookback period

includes taxes “on or measured by income or gross receipts--for a

taxable year ending on or before the date of the filing of the

petition for which a return, if required, is last due, including

extensions, after three years before the date of the filing of

the petition”.   11 U.S.C. sec. 507(a)(8)(A)(i) (2000).   As stated

in Young v. United States, 535 U.S. 43, 46 (2002):   “If the IRS

has a claim for taxes for which the return was due within three

years before the bankruptcy petition was filed, the claim * * *

is nondischargeable in bankruptcy”.

     Petitioner’s income tax return for the taxable year 1996 was

due on April 15, 1997.   Petitioner filed her chapter 7 bankruptcy


     4
      Sec. 6330(c)(2) provides that a taxpayer may raise at the
sec. 6330 hearing “any relevant issue relating to the unpaid
tax”, which includes “challenges to the appropriateness of
collection actions”. Sec. 6330(c)(2)(A)(ii). Petitioner’s
contention that her 1995 and 1996 income tax liabilities were
discharged in bankruptcy raises an issue relevant to the
appropriateness of the collection action. Washington v.
Commissioner, 120 T.C. 114, 120 n.9 (2003).
                              - 10 -

petition on July 27, 1999, within 3 years of the date on which

her 1996 income tax return was due.    As a result, petitioner’s

chapter 7 bankruptcy discharge did not absolve her of her 1996

income tax liability.

Petitioner’s 1995 Income Tax Liability

      With respect to petitioner’s 1995 income tax liability,

respondent acknowledges that petitioner’s 1995 income tax return

was due on April 15, 1996, more than 3 years before the chapter 7

filing on July 27, 1999.   Respondent asserts, however, that

petitioner’s 1995 income tax liability was not discharged because

of principles of equitable tolling, citing as support for his

assertion the recent decision of the U.S. Supreme Court in Young

v. United States, supra.

      In Young v. United States, supra at 44-45, the taxpayers’

1992 income tax return was due on October 15, 1993.    The

taxpayers filed a chapter 13 bankruptcy petition on May 1, 1996,

followed by a chapter 7 bankruptcy petition on March 12, 1997.

Id.   The Bankruptcy Court dismissed the taxpayers’ chapter 13

petition on March 13, 1997, pursuant to the taxpayers’ motion,

and granted a chapter 7 discharge on June 17, 1997.    Id.

Thereafter, the taxpayers refused to make payments on their 1992

income tax liability, claiming that the liability was a debt

outside of the lookback period and, therefore, was discharged.

Id.
                                 - 11 -

      The Supreme Court held that the 1992 income tax liability

was not discharged because the taxpayers’ chapter 13 bankruptcy

petition of May 1, 1996, tolled the lookback period.      Id. at 54.

The Court explained that limitations periods, such as the

lookback period under 11 U.S.C. sec. 507(a)(8), traditionally are

subject to principles of equitable tolling and that neither

section 523 nor section 507 of the Bankruptcy Code contains

language indicating that Congress intended to preclude equitable

tolling.   Id. at 48-53.    When the taxpayers filed the chapter 13

petition, the automatic stay of Bankruptcy Code section 362(a)

prevented collection of their 1992 income tax liability.      Id. at

46.   Without the application of equitable tolling, a voluntary

dismissal of the chapter 13 petition after the lookback period

has expired, followed by the filing of a chapter 7 petition,

could be used by taxpayers as a strategy to discharge their

income tax liability.      Id.

      Applying equitable tolling to the present case, we must

conclude that petitioner’s chapter 7 bankruptcy discharge did not

relieve her of the 1995 income tax liability.     When petitioner

filed the chapter 13 bankruptcy petition on January 28, 1997, the

lookback period was tolled until the dismissal of the chapter 13

petition on March 11, 1999.      As of petitioner’s chapter 7 filing

on July 27, 1999, the lookback period of section 507(a)(8)(A)(i)

of the Bankruptcy Code remained open so as to prevent discharge
                             - 12 -

of the 1995 income tax liability.

      We uphold the Appeals officer’s determination that the

filing of a tax lien was an appropriate enforcement action with

respect to petitioner’s 1995 and 1996 income tax liabilities.   We

shall grant respondent’s motion for summary judgment and sustain

the notice of determination dated February 19, 2002.

     For the reasons stated and to reflect the foregoing,


                                    An appropriate order and

                              decision will be entered.
