Donald Wayne Bush, et ux. v. United States

In Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 160-61 (2010), the Court defined jurisdiction as “a court’s adjudicatory authority” over classes of cases and persons. Bankruptcy Code §505(a)(1) precisely fits this definition, conferring authority on the bankruptcy courts to “determine the amount or legality of any tax, any fine or penalty relating to a tax, or any addition to tax. . . . ” 11 U.S.C. §505(a)(1). Pet. App. 70a. Consistent with Muchnick, eight circuits have recognized that §505(a)(1) sets out a grant of jurisdiction. The Seventh Circuit, however, held that §505(a)(1) does not itself establish bankruptcy jurisdiction, but instead merely “sets out a task for bankruptcy judges” to perform. Pet. App. 18a. It further concluded, contrary to five other circuits, that bankruptcy courts also lack “related to” jurisdiction under 28 U.S.C. §1334(b) to determine the amount of a debtor’s nondischargeable debt despite the impact that debt has on the scope of a debtor’s discharge. Pet. App. 22a. The questions presented are:

1. Whether 11 U.S.C. §505(a)(1) confers jurisdiction on the bankruptcy court to adjudicate the amount and legality of a debtor’s tax liabilities.

2. Whether the bankruptcy court has jurisdiction under 28 U.S.C. §1334(b) to determine the amount of a debtor’s non-dischargeable debt.