Young v. United States - Oral Argument - January 09, 2002

Young v. United States

Media for Young v. United States

Audio Transcription for Opinion Announcement - March 04, 2002 in Young v. United States

Audio Transcription for Oral Argument - January 09, 2002 in Young v. United States

William H. Rehnquist:

We'll hear argument now in No. 00-1567, Cornelius P. Young v. the United States.

Mr. Clark.

Grenville Clark, III:

Mr. Chief Justice, and may it please the Court: This is a case about discharging taxes in a bankruptcy proceeding.

The Bankruptcy Code provides that income taxes that are more than 3 years old are discharged in a bankruptcy proceeding.

In the petitioner's case, the Youngs filed a Chapter 7 bankruptcy proceeding in March of 1997, some 3 years, 5 months after they had filed their 1992 income tax return in October of 1993.

The Bankruptcy Code provides, on this simple set of facts, that the Youngs' 1992 income tax obligation is discharged.

The operative code sections are 727, 523, and 507, which I set out at pages 10 and 11 of my brief.

William H. Rehnquist:

Well, they also filed an earlier bankruptcy petition, didn't they?

Grenville Clark, III:

They did indeed, Your Honor.

That was filed in May of 1996.

It was a Chapter 13 proceeding.

It lasted just short of 6 months, and the... the argument that the IRS has tendered in this case and below is that you subtract out the 6 months they are in the prior proceeding from the calculation of the 3 years, 5 months, and when you do that, you come out with the Youngs ending up with being only 2 years 11 months away from the 3-year mark--

William H. Rehnquist:

Well, why was the first Chapter 13 petition dismissed?

Grenville Clark, III:

--It was dismissed at the behest of the Youngs for a variety of reasons that did not appear in the record.

During the Chapter 13 proceeding, they had succeeded in selling their house and paying off mortgages on the house that had... they had placed on there.

Later on in the proceeding, they had gone through the trouble of engaging special counsel, an attorney Noreen Farr, to do something which does not appear in the record.

But they finally decided that they would dismiss the case rather than go forward with it.

The reasons that they did not... do not appear in the record.

They dismissed the case about 3 weeks before they would have gotten to confirmation of their plan, which they had submitted earlier in the case.

Ruth Bader Ginsburg:

But there was also the fact that they... in addition to dismissing the Chapter 13, the day before that order was entered granting the dismissal at their request, they started a new bankruptcy proceeding.

They started a Chapter 7 proceeding, and that way they were able to stretch out the stay of any effort the Government might have made to collect the tax.

Grenville Clark, III:

The... the bankruptcy... the Chapter 13 bankruptcy proceeding was dismissed.

The final closing order in the case was entered in March of 1997.

The motion that... or the request, I think, that the Youngs had filed was in October of 1996, October 23, 1996.

It is our position that the automatic stay expired as soon as the case was dismissed and not later when the case was closed a number of months later.

And I think that is significant because in our view the IRS was entitled to restart their enforced collection efforts against the Youngs--

Ruth Bader Ginsburg:

Do you have authority for that, for saying that... that it's not the date that the bankruptcy was closed, but some... the earlier date when they... when they made that motion?

Grenville Clark, III:

--Yes.

It's in the Bankruptcy Code itself, section 320... yes... I'll have to get the--

Anthony M. Kennedy:

Is the filing of the notice of dismissal, which was October 23?