Ever Clean Servs. v. Commissioner

MEMORANDUM OPINION

RAUM, Judge: This case is before us on the Government's motion to dismiss for lack of jurisdiction. The sole contention upon which the motion is based is that the petition filed herein is invalid, because at the time of filing there was in effect an automatic stay of the commencement of a proceeding before this Court by the petitioner, as a result of the petitioner's prior filing of a petition in the United States Bankruptcy Court*19 under 11 U.S.C. section 301 for reorganization under 11 U.S.C. ch. 11. The facts relevant to the motion have been stipulated.

The petitioner, Ever Clean Services, Inc., is a Massachusetts corporation with its principal place of business in Everett, Mass. On March 21, 1980, petitioner filed a petition for reorganization pursuant to 11 U.S.C. ch. 11. On March 25, 1980, the Commissioner issued a statutory notice of deficiency to petitioner, determining a $4,988 deficiency in petitioner's Federal income tax for the taxable year ended February 28, 1977, and on April 4, 1980, petitioner filed a petition in this Court seeking a redetermination of that deficiency. On October 6, 1980, petitioner filed a Plan of Arrangement in the reorganization proceeding, which was confirmed by order of the Bankruptcy Court on May 11, 1981. Prior to that time, on March 30, 1981, the Government filed an amended Proof of Claim for Internal Revenue Taxes in the reorganization proceeding, which included the deficiency determined for the taxable year ended February 28, 1977. Petitioner and the Government thereafter executed a Stipulation for*20 payment of Federal Taxes, which also covered this same deficiency. Finally, the reorganization proceeding was closed by order of the Bankruptcy Court dated August 2, 1982.

The Government contends that the filing of the petition for reorganization under 11 U.S.C. ch. 11 on March 21, 1980, automatically operated as a stay of the commencement of a proceeding before this Court, and that the stay was still in effect on April 4, 1980, when the petition was filed herein for redetermination of the tax deficiency for the taxable year ended February 28, 1977. Accordingly, the petition is said to be invalid, with the result that there is missing a prerequisite for our jurisdiction in this case. Citing McClamma v. Commissioner,76 T.C. 754 (1981), the Government contends that this proceeding should therefore be dismissed for lack of jurisdiction. We agree. The precise issue presented here was addressed in McClamma v. Commissioner, and following our holding therein, the Government's motion will be granted. ¹

*21 The law relating to bankruptcy was codified and enacted as Title 11 of the United States Code, entitled "Bankruptcy", on November 6, 1978, by Pub. L. 95-598, 92 Stat. 2549, with its provisions generally effective on October 1, 1979. See 92 Stat. 2682. In respect of the matter at issue here, 11 U.S.C. section 362(a), entitled "Automatic stay", provides that the filing of a petition under that title "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". ² Thus, without any requirement of action by the Bankruptcy Court, the filing of the petition under Title 11 on March 21, 1980, automatically precluded the petitioner from commencing an action in this Court. Nonetheless, petitioner sought to do precisely that by filing, on April 4, 1980, a petition herein for redetermination of the deficiency for the taxable year ended February 28, 1977. This petition was filed in plain violation of the stay, which was still in effect on April 4, 1980. ³

*22 In McClamma v. Commissioner,supra, this Court held that the filing of a petition for redetermination of a deficiency while there was in effect an automatic stay under 11 U.S.C. section 362(a) in respect of the petitioner rendered the petition "invalid". 76 T.C. at 757. Despite this holding, and without requesting that we reconsider it, petitioner seeks to have the invalidity somehow removed in view of the circumstance that the reorganization proceeding under Title 11 has now been closed. In essence, petitioner asks us to "reinstate" the petition, giving effect to the automatic stay only as a deferment of filing for the period of the reorganization proceeding. This we cannot do. To treat the petition in this manner would to a certain extent countenance an action taken in violation of an express prohibition of a Federal statute. We instead consider the petition as invalid from the moment of filing, and not thereafter susceptible to resurrection.

Accordingly, there is absent here a valid petition, which is one of the perequisites for our jurisdiction, see Rule 13(c), Tax Court Rules of Practice and Procedure; cf. Vitale v. Commissioner,59 T.C. 246, 247 (1972);*23 Stewart v. Commissioner,55 T.C. 238, 240 (1970), affd. per curiam (9th Cir., Aug. 10, 1972). The Government's motion to dismiss will therefore be granted, and

An order will be entered dismissing the case for lack of jurisdiction.