OPINION
Appellants Clayton and Sally Baker appeal from the rejection of their attempt to overturn a stipulated judgment entered against them by the United States Tax Court. We have jurisdiction pursuant to 28 U.S.C. §§ 158(d) and 1291, and affirm.
I.
The Bakers’ tax problems began in late 1978 or early 1979, when they invested $30,-000 in tax shelters promoted by Maxwell Berg and the Los Angeles law firm of Berg & Allen. Details about the tax shelters, which the IRS eventually disallowed as shams, are sketchy.
1
Both parties agree, however, that Berg filed amended returns on behalf of the Bakers, using the shelters to claim deductions and credits for the tax years 1975 through 1980. The resulting refund cheeks were sent directly to Berg, who negotiated them and, according to the Bakers, kept the money for himself. The Bakers deny authorizing Berg to file the amended returns, or receiving any proceeds of the refund checks. They claim to have discover
The Bakers petitioned the Tax Court for review of the IRS decision in May 1983, arguing that the statute of limitations barred the IRS from assessing additional taxes for the tax years 1975 through 1978. Proceedings before the Tax Court moved slowly. The Bakers’ petition was one of more than 300 filed in response to the notices of deficiency, and the litigants lacked access to Berg & Allen’s records, which had been seized in connection with a grand jury investigation in 1981, and to Berg himself, who had fled the country.
In 1988, five years after the Bakers filed their Tax Court petition, the Tax Court litigants finally obtained limited access to the documents seized by the grand jury. Two years later, the Tax Court tried six “test cases,” upholding the notices of deficiency and refusing to allow the investors a credit based on the refunds Berg had allegedly pocketed.
See Abeson v. Commissioner,
After the test cases were decided, the IRS made a settlement offer to some of the Tax Court petitioners, including the Bakers. Under the terms of the offer, the taxpayers would get “credits” equal to half of the amount they had invested with Berg; in the Bakers’ case the IRS calculated the credit at $15,000. This credit would be applied to the taxpayer’s deficiency, beginning with the oldest years, until it was exhausted. 2 Settlement papers, in the form of a stipulated Tax Court judgment reflecting the application of the credit, were forwarded to the Bakers by their lawyer in March 1991. 3
Accompanying the stipulation was a letter, written by the Bakers’ lawyer, which contained the following explanation:
The settlement documents reflect a reduction in the gross amount of taxes claimed by the IRS equal to half of the size of your projected “investment” with Mr. Berg.... This reduction was applied to the oldest years first, until exhausted.
Once the documents are filed with the Court, it can be expected that a bill for all the unpaid taxes plus accrued interest will be generated by the Internal Revenue Service within about three to four months. There is no requirement that the bills be paid immediately, but interest will continue to accrue until they are paid....
Neither the letter nor the accompanying stipulation provided the Bakers with a dollar figure representing their total liability for taxes and accrued interest as of the settlement date. 4
The Bakers did not discuss the stipulation with their lawyer before they signed it on March 22,1991. They claim that because the stipulation showed no taxes due for 1975 and 1976, they assumed the Tax Court had accepted their statute of limitations defense for those years. Despite their lawyer’s explanation that the stipulation reflected the credit offered by the IRS, the Bakers believed the
The Tax Court entered the stipulated decision on April 10, 1991, and neither party appealed. In 1993, the Bakers received a tax bill for approximately $175,000, most of it interest that had been accruing since the late 1970s. The Bakers did not return to Tax Court. Instead, they filed a joint voluntary petition under Chapter 13 of the Bankruptcy Code. The IRS filed a proof of claim for $174,182.63 to which the Bakers objected. The Bankruptcy Court overruled the objection, holding that it lacked jurisdiction to readjudicate the Bakers’ tax liability. On appeal, the district court affirmed. This appeal followed.
H.
The Bakers contend the Bankruptcy Court erred in refusing to readjudicate their tax liability. We disagree.
A.
Ordinarily a bankruptcy court can determine the amount and validity of a debtor’s taxes, 11 U.S.C. § 505(a)(1), but this power is limited by 11 U.S.C. § 505(a)(2)(A), which bars bankruptcy courts from determining “the amount or legality of a tax ... if such amount or legality was contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction” before commencement of the bankruptcy proceeding.
The Bakers argue § 505(a)(2)(A) does not apply to their case because the “amount or legality” of their tax was not “contested” and “adjudicated” in the Tax Court within the meaning of the statute. 5 Neither argument is persuasive.
On its face, the Tax Court judgment establishes the
amount
of tax owed, and we agree with the Fifth Circuit’s conclusion that an assessment of the amount owed “presupposes the legality of that assessment.”
IRS v. Teal (Matter of Teal),
We also reject the Bakers’ argument that, even if § 505(a)(2)(A) applies, the statute should not preclude a court from granting equitable relief under Fed.R.Civ.P. 60(b).
7
Section 505(a)(2)(A) is a jurisdictional statute that deprives bankruptcy courts of authority to decide a category of claims.
Matter of Teal,
B.
The lower courts’ holdings are also supported by the doctrine of res judica-ta.
8
Under this doctrine, a final judgment on the merits of an action precludes the parties from relitigating issues that were or could have been raised in that action.
Federated Dep’t Stores, Inc. v. Moitie,
The Bakers’ liability for the years in question was litigated before the Tax Court, and the Tax Court issued its final judgment before the Bankruptcy Court proceedings began. See I.R.C. §§ 7483, 7481(a). The Bankruptcy Court proceeding involved the same parties, and the issue the Bakers sought to raise—their statute of limitations defense—had been litigated before the Tax Court. Res judicata barred the Bankruptcy Court from revisiting the Tax Court’s decision.
III.
Because its jurisdiction was limited by 11 U.S.C. § 505(a)(2)(A) and the doctrine of res judicata, the Bankruptcy Court could not redetermine the Bakers’ tax liability as established by the stipulated Tax Court decision.
AFFIRMED.
Notes
. Some of the events surrounding the Berg & Allen tax shelters are discussed in a related Tax Court case.
See Abeson v. Commissioner,
. An internal IRS memorandum, which was not provided to the Bakers or their lawyer at the time of settlement, indicates the IRS did not consider the Bakers’ statute of limitations defense when it calculated and applied their credit. According to the memorandum, the credit was applied as follows:
Year Deficiency Credit applied Credit carryover
1975 $4,402.00 $4,402.00 $10,598.00
1976 $5,623.00 $5,623.00 $ 4,975.00
1977 $5,813.00 $4,975.00 zero
. The stipulation set out the Bakers’ remaining liability for income tax and additions to tax as follows:
Year Income tax Additions to tax, I.R.C. § 6651(a)
1975 none none
1976 none none
1977 $ 838.00 none
1978 $15,695.00 $ 835.00
1979 $14,905.17 $ 629.55
1980 $25,207.61 $1,108.00
. The stipulation reflected tax deficiencies of $56,645.78 and additions to tax of $2,572.55; the only reference to interest was a statement that by signing the stipulation, the Bakers waived "the restrictions ... prohibiting assessment and collection of any deficiency in tax ... plus statutory interest, until the decision of the Tax Court has become final.”
. It is undisputed that the Tax Court is a court of competent jurisdiction and that proceedings in the Tax Court ended before the Bakers filed for bankruptcy.
. The statement of Rep. Edwards, the House sponsor of the Bankruptcy Reform Act of 1978, was issued in lieu of a conference committee report and constitutes persuasive evidence of Congress's intent.
Begier v. IRS,
. Although the Bakers never filed a Rule 60(b) motion, they objected to the IRS proof of claim on the ground that they were entitled to relief under Rule 60(b). Neither the Bankruptcy Court nor the District Court addressed the availability of relief under Rule 60(b), and because of our jurisdictional holding, we decline to do so as well.
. We agree with the Fifth Circuit's statement that res judicata is “closely related, if not identical” to issues regarding the Bankruptcy Court’s authority under Section 505.
See Matter of Teal,