Bryant v. Commissioner of Internal Revenue
- Summarized by Dean Langdon , DelCotto Law Group PLLC
- 15 years 4 months ago
- Citation:
- (6th Circuit, Dec 31,1969)
- Tag(s):
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- Ruling:
- The IRS acted within its discretion in applying a prepetition overpayment of taxes to a discharged prepetition tax liability under section 6402(a) of the Internal Revenue Code. However, the portion of the overpayment which was made postpetition could not be applied to the discharged prepetition tax liability.
- Procedural context:
- Appeal from Tax Court ruling on IRS decision on application of tax overpayment, with an intermediate stop in bankruptcy court to determine the effect of the discharge injunction on the IRS' ability to apply the overpayment to a discharged debt.
- Facts:
- James Bryant owed taxes for 1997 and 2000 when he filed a Chapter 7 bankruptcy petition in the Bankruptcy Court for the Western District of Kentucky on December 9, 2003. He received a discharge of his debts, including the 1997 taxes. Mr. Bryant filed his 2003 tax return in June, 2004, which reflected a $6,445 overpayment of his 2003 taxes. Mr. Bryant asked the IRS to apply the overpayment to his 2000 tax liability. The IRS pro-rated the overpayment, applying the portion paid prior to December 9, 2003 to the 1997 tax liability, and the portion paid postpetition to the 2000 liability. After pursuing his appeal rights to the Tax Court, that court allowed Mr. Bryant to reopen his bankruptcy for a determination of whether his discharge barred the IRS offset. The bankruptcy court held that the IRS could offset a prepetition obligation against a prepetition liability, but could not offset a postpetition overpayment against a prepetition liability. The Tax Court upheld the IRS' offset, a decision which was affirmed by the Sixth Circuit Court of Appeals. The Court of Appeals held that section 6402(a) controlled in the event of an overpayment, in contrast to a voluntary payment, where no statute controlled and the IRS traditionally applied such payments as requested by a taxpayer.
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