510 B.R. 433
Bankr. M.D. Ga.2014Background
- Debtors filed a voluntary Chapter 13 petition on November 5, 2007; plan confirmed February 27, 2008 with provision to pay all priority claims in full.
- IRS filed a proof of claim totaling $59,509.33: priority, secured, and unsecured components, later reclassified the secured portion as unsecured after objections.
- Debtors discharged under 11 U.S.C. § 1328(a) on March 4, 2013; case closed and later reopened on October 7, 2013 to pursue claims.
- Debtors filed a complaint on November 6, 2013 alleging IRS collection efforts violated the discharge order.
- IRS moved to dismiss arguing Debtors failed to exhaust administrative remedies under 26 U.S.C. § 7433(d)(1).
- Court adopts the Moore line of authority and grants the IRS motion to dismiss for failure to exhaust administrative remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether exhaustion of administrative remedies is required under § 7433 before bringing a § 7433 damages action. | Debtors rely on non-jurisdictional view and other authorities to avoid exhaustion. | IRS contends § 7433(d)(1) requires exhaustion prior to filing damages action. | Yes; exhaustion required; dismissal upheld. |
| Whether exhaustion applies to actions for violating discharge under § 524. | Debtors argue § 7433(e) exclusive remedy bypasses exhaustion. | IRS argues exhaustion still governs petitions under § 7433(e). | Yes; exhaustion applies to § 7433(e) claims; dismissal affirmed. |
Key Cases Cited
- Hoogerheide v. IRS, 637 F.3d 634 (6th Cir. 2011) (exhaustion required; not jurisdictional, but still necessary)
- Galvez v. IRS, 448 F. App’x 880 (11th Cir. 2011) (exhaustion not jurisdictional; may fail state claim if not exhausted)
- Kuhl v. U.S., 467 F.3d 145 (2d Cir. 2006) (after exhaustion, taxpayer may petition bankruptcy court for damages)
- In re Graycarr, Inc., 330 B.R. 741 (Bankr.W.D. Ark. 2005) (Graham reasoning on exhaustion; exclusive-remedy per § 7433(e) debated)
- In re Kight, 460 B.R. 555 (Bankr.M.D. Fla. 2011) (exhaustion requirement for § 7433 damages upheld)