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IN RE EPSTEIN

June 24, 1976

In the Matter of Benjamin Epstein, a/k/a Ben Epstein, a/k/a Benjamin K. Epstein, Bankrupt. Benjamin Epstein, etc., Plaintiff-Appellee,
v.
United States of America (Internal Revenue Service), Defendant-Appellant


Bramwell, District Judge.


The opinion of the court was delivered by: BRAMWELL

BRAMWELL, District Judge.

This is an appeal from an order of the Bankruptcy Court denying the Government's motion to dismiss. This Court finds the ruling of the Bankruptcy Judge proper and affirms its decision.

 The bankrupt, Benjamin Epstein, filed an application with the Bankruptcy Court to determine the dischargeability of a debt allegedly owed to the Internal Revenue Service. Notice of Trial was issued directing the appearance of the Internal Revenue Service for trial. In response, the Government filed a motion to dismiss on the ground that the Bankruptcy Court lacks jurisdiction to determine the dischargeability of Federal taxes where the Internal Revenue Service has not filed a proof of claim nor has otherwise participated in the bankruptcy proceedings, except to object to the Bankruptcy Court's jurisdiction.

 On March 12, 1974, Bankruptcy Judge William J. Rudin found that the Bankruptcy Court had jurisdiction to determine the dischargeability of Federal tax liabilities. This decision was included in the Court Order of March 27, 1974. Thereafter, the Government brought this appeal.

 Both parties agree that the sole issue presented here is whether the Bankruptcy Court has jurisdiction to determine the dischargeability of debts owed to the Internal Revenue Service for which no proof of claim has been filed.

 Section 2a(2A) of the Bankruptcy Act, 11 U.S.C. § 11(a)(2A), an amendment enacted in 1966, provides that Bankruptcy Courts are vested with jurisdiction to

 
hear and determine, or cause to be heard and determined, any question arising as to the amount of legality of any unpaid tax, whether or not previously assessed, which has not prior to bankruptcy been contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction . . ..

 Furthermore, Section 17 of the Act was amended in 1970 to include subsection c(1), [11 U.S.C. § 35(c)(1)] which provides:

 
the bankrupt or any creditor may file an application with the court for the determination of the dischargeability of any debt.

 Appellee Epstein contends that the statutory language of Section 17 is not limited to claims filed by the Government in a Bankruptcy Proceeding but rather covers all debts of the bankrupt. He asserts that taxes are therefore included irrespective of whether the taxing authority has filed proof of claim.

 However, the Government contends that the doctrine of sovereign immunity and the limited jurisdiction of the Bankruptcy Court precludes jurisdiction of the Bankruptcy Court. It argues that the 1966 and 1970 amendments were not intended to change the basic principle that sovereign immunity is not waived unless the Internal Revenue Service files proof of claim or otherwise participates in the proceeding. The Government further alleges that the intent of Congress as expressed in Section 7401 of the Internal Revenue Code of 1954 *fn1" (26 U.S.C. § 7401) would be frustrated if this court were to hold that the Bankruptcy Court has jurisdiction here in that the Treasury and Justice Departments would then lose control over bringing civil actions to collect taxes.

 Turning first to § 2a(2A), this Court is in agreement with the numerous scholars and jurists who have exhaustively researched the legislative history of this section and found it to support the Bankruptcy Court's jurisdiction to determine the dischargeability of unpaid taxes regardless of the filing of proof of claim. See e.g., Bostwick v. United States of America, 521 F.2d 741, (8th Cir. 1975); Gwilliam v. United States of America, CCH Bankr. L. Rep. P65,748 (9th Cir. 1975); In the Matter of Century Vault Co., 416 F.2d 1035, 1041 (3d Cir. 1969); In re Murphy, 381 F. Supp. 813 (N.D. Ala. 1974); In re Durensky, 377 F. Supp. 798 (N.D. Tex. 1974); 3A Collier on Bankruptcy P64.407[3] at 2234-35 (14th ed. rev. 1972); Countryman, The New Dischargeability Law, 45 Am. Bank. L.J. 32-33 (Winter 1971); Kennedy, The Bankruptcy Amendments of 1966, 1 Ga. L. Rev. 149, 159 n. 41, 172-73 (1967).

 On first glance, the legislative history of the provision appears to support the Government's contention that Congress did not intend to waive the sovereign immunity of the United States. A report of the Senate Finance Committee stated:

 
* * * This committee understands that this amendment makes no change in present law under which a bankruptcy court cannot adjudicate the merits of any claim, including a Federal tax claim, which has not been asserted in the ...

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