Terrell v. IRS (In re Terrell)
- Summarized by Steven Mulligan , Coan, Payton & Payne, LLC
- 9 years 1 week ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- WO-16-007 (10th Circuit, Feb 17,2017) Not Published
- Tag(s):
-
- Ruling:
- A debtor who has been criminally convicted for tax-related crimes may be collaterally estopped from discharging his tax debt in bankruptcy for the subject years if these elements are met: (1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been finally adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party or in privity with a party to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.
- Procedural context:
- The bankruptcy court granted the IRS' summary judgment motion holding that debtor was collaterally estopped from arguing his tax debt was discharged. The 10th Circuit BAP affirmed reviewing the bankruptcy court's decision de novo.
- Facts:
- In 2005, debtor was charged with, and pleaded guilty to, willfully filing a false tax return for the tax year 1997. In his plea agreement, debtor admitted: (1) he prepared and signed his 1997 income tax return; (2) the return contained a written declaration that it was made under the penalty of perjury; (3) he did not believe the tax return was true and correct as to all material matters; and (4) he acted willfully in filing the return. Debtor specifically admitted he falsely reported his total income as $10,000 on his 1997 tax return despite the knowledge that his total income was in excess of $130,000 for that tax year. Thereafter, the IRS assessed Terrell for federal income tax of $53,618.00 and interest of $63,815.80 for the 1997 tax year. In 2010, debtor filed bankruptcy and received a discharge. His case was a no asset case and the IRS did not file a claim. Four years later, debtor reopened his case and filed a complaint against the IRS requesting a determination that his tax debt has been discharged pursuant to 11 U.S.C. § 523(a)(1). The BAP found that the bankruptcy court properly applied the elements for collateral estoppel.
- Judge(s):
- NUGENT, ROMERO, MOSIER (Romero)
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