United States v. Colasuonno
- Summarized by Stephen Falanga , Walsh Pizzi O'Reilly Falanga LLP
- 9 months 1 week ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 24-924 (2nd Circuit, May 13,2025) Not Published
- Tag(s):
-
- Ruling:
- In a summary order, the Second Circuit rejected the debtor's argument that the government's filing of a Notice of Federal Tax lien allegedly in violation of the automatic stay provides a basis to suspend the tolling of the statute of limitations for collection of an assessment The proper remedy for an alleged stay violation is to seek damages in bankruptcy court. As such, the IRS's complaint to collect an assessment against the debtor was timely filed having been filed within 10 years and 6 months after the debtor's discharge.
- Procedural context:
- Debtor, Philip Colasuonno appealed from a judgment of the United States District Court for the Southern
District of New York denying his motion for judgment on the pleadings and the grant of summary judgment in favor of United States confirming the government timely filed a complaint to recover assessed trust fund recovery penalties and interest arising from the debtor's business.
The Second Circuit affirmed the judgment of the district court.
- Facts:
- The debtor was the partial owner of a company that failed to collect, truthfully account for, and remit Social Security, Medicare, unemployment, and income taxes from its employees’ wages and to report these holdings to the Internal Revenue Service (IRS), as required by federal law. He subsequently pled guilty to conspiracy to commit tax fraud, in violation of 18 U.S.C. § 371, and aiding and assisting in the preparation of a false tax return, in violation of 26 U.S.C. §
7206(2).
The debtor then filed a petition for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.
On April 21, 2011, while the bankruptcy proceedings were pending, the IRS timely assessed $1,742,410.30 in trust fund recovery penalties against Colasuonno for the relevant tax period.
Shortly thereafter, the IRS issued a Notice of Federal Tax Lien to the debtor, which it filed with the Westchester County Clerk. On July 22, 2011, the bankruptcy court granted Colasuonno a discharge.
The United States commenced this action against the debtor in December 2021 to recover the assessed trust fund recovery penalties and interest. The debtor moved for judgment on the pleadings, contending that the complaint
was untimely.
The district court denied the debtor's motion, holding that the complaint was timely filed under the applicable tolling provision and rejecting the debtor's argument that the IRS’s alleged violation of the bankruptcy stay by filing the Notice of Federal Tax Lein meant that the tolling provision did not apply.
The district court later granted the government’s motion for summary judgment.
The debtor timely appealed.
- Judge(s):
- For the Court
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