Broos v. United States, No. 15-6013 (8th Cir. 2015)
Annotate this CaseThe Debtors sought Chapter 7 bankruptcy relief. On their schedules, they listed the IRS as an unsecured creditor holding a claim in the amount of $249,085. They received a discharge in October 2009. Following the close of their Chapter 7 case, several IRS employees issued IRS levies and filed Notices of Federal Tax Liens with respect to the Debtors’ federal tax debt. The Debtors filed an adversary proceeding, naming each IRS employee as a defendant, alleging that the IRS employees violated 26 U.S.C. 7433 by issuing levies and filing the Notices of Federal Tax Liens, and seeking actual and punitive damages. The Bankruptcy Court entered an order substituting the United States as the sole defendant, denying the Debtors’ request for default judgment, and dismissing the Debtors’ complaint. The Eighth Circuit Bankruptcy Appellate Panel affirmed. The Debtors did not file an administrative claim for damages with the IRS and, therefore, may not bring an action for damages under section 7433. If the Debtors wish to sue the government for violations of the bankruptcy discharge under 11 U.S.C. 524, they must first exhaust their administrative remedies.
Court Description: Schermer, Author, with Nail and Shodeen, Bankruptcy Judges] Bankruptcy Appellate Panel. The United States was the proper party and the court did not err in substituting the U.S. for the individual IRS agents named in this adversary proceeding; no error in denying debtors' motion for a default judgment as the U.S. timely entered its appearance; debtors had failed to exhaust their administrative remedies with respect to their damages claims against the IRS and dismissal was proper [ July 15, 2015
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