Charles K. Breland, Jr. v. Commissioner of Internal Revenue

In the Petitioner’s Chapter 11 bankruptcy proceeding, the IRS filed multiple proofs of claim asserting that Petitioner owed federal income tax for years 2004-2008. The Petitioner also filed a reorganization plan that provided the IRS would be paid less than the full amount of its claims. Petitioner and IRS agreed to entry of a consent order to resolve their disputes related to Breland’s income tax debt for years 2004-2008. The bankruptcy court interpreted the consent order as adjudicating the IRS’s priority tax claims for taxes owed for years 2004-2008 and preventing assessment of additional taxes for years 2004-2008. However, the United States Tax Court and the United States Court of Appeals for the Eleventh Circuit held that the IRS could assert that Petitioner owed additional taxes for years 2004-2008 despite the bankruptcy court’s orders to the contrary. Petitioner requests that the Court grant its petition to consider the following questions:

1. Is the IRS bound by the terms of a consent order entered by a United States Bankruptcy Court providing that the IRS gave up collection rights, including but not limited to the right to assess additional taxes for the years in question?

2. Are orders entered by a United States Bankruptcy Court adjudicating a debtor’s tax liability res judicata in subsequent proceedings brought in the United States Tax Court?