1.  PROCEDURE - Robert Paul Willison filed a chapter 7 case on September 16, 1992. On December 28, 1992, he moved to dismiss the case on the grounds that he may have filed too early to discharge certain federal income taxes (Docket No. 14).

He has filed a declaration of nonopposition, also dated December 28, 1992 (Docket No. 15; I will presume he gave notice of the motion to creditors on November 23, 1992).

Notwithstanding the lack of objection from any party, the motion will be denied because (a) the notice given to the IRS was inadequate, and (b) dismissal may be detrimental to a creditor.

     2.  INADEQUACY OF NOTICE - On November 23, 1992, Willison sent notice in the form of a letter to his creditors, including the IRS, stating simply that he had filed a motion to dismiss and that they had 15 days to object. (See last page of Docket No. 14 for copy of letter). The notice did not inform the IRS that dismissal is requested without prejudice so that Willison could refile later in order to discharge taxes he believes might be nondischargeable in the present case.

The memorandum and motion do not appear to have been served on the IRS. This alone is reason to deny the motion without prejudice to allow Willison to serve his motion and memorandum on the IRS or to advise me that he did in fact serve the IRS with the motion and memorandum.

        3 ABR 94  The procedure for noticing a dismissal under § 707(a) of the Bankruptcy Code requires a "motion filed and served as required by Rule 9013." FRBP 1017(d). FRBP 9013 provides that a request for an order shall generally be by a written motion served on the trustee and any party the court directs (subject to exceptions for motions made during hearings, applications, and some ex parte matters). In this case, I will require that the IRS be served with the motion and memorandum (not just the notice or letter as Willison has done) before considering the dismissal motion. If the IRS were served with documents giving it adequate notice, it is likely that it would object on the grounds which I will spell out in § 3 of this memorandum.

     3.  DISMISSAL IS IMPROPER IF THE IRS WILL BE HARMED BY IT - Willison's motion relates facts that indicate dismissal may be improper. Dismissal of a chapter 7 is governed by § 707 of the Bankruptcy Code:

(a) The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including-

(1) unreasonable delay by the debtor that is prejudicial to creditors;

(2) nonpayment of any fees [or] and charges required under chapter 123 of title 28; and

(3) failure of the debtor in a voluntary case to file, within fifteen days or such additional time as the court may allow after the filing of the petition commencing such case, the information required by paragraph (1) of section 521, but only on a motion by the United States trustee.

(b) [dealing with dismissal for substantial abuse on the motion of the U.S. Trustee or the court on its own motion]

Willison's reason for wanting a dismissal without prejudice is his belief the he filed too early to discharge his 1987 federal income tax obligation. He believes that had he waited until after February 6, 1993 to file a chapter 7 case, these taxes would also be dischargeable. He is referring to §§ 507(a)(7) and 523(a)(1)(A) of the Bankruptcy Code. If Willison is correct, then dismissal of the present case to allow a later filing would be detrimental to the IRS.

In a case with very similar facts, In re Leach, 130 BR 855 (9th Cir BAP 1992), the debtor, on faulty legal advise, had filed a chapter 7 case several months too early to discharge some federal taxes. He moved to dismiss so that he could refile later. The bankruptcy judge found there was "legal         3 ABR 95  prejudice" to the IRS because federal taxes which were nondischargeable in the pending case (and thus, potentially collectible from Leach) would become uncollectible due to Leach's anticipated discharge of the tax obligation in the purposed later case. The Bankruptcy Appellate Panel held that denial of a motion to dismiss was within the bankruptcy judge's sound discretion, which was proper on the judge's finding of "legal prejudice." Leach at 856-57. The BAP said:

The law in the Ninth Circuit is clear: a voluntary Chapter 7 debtor is entitled to dismissal of his case so long as such dismissal will cause no "legal prejudice" to interested parties. In re International Airport Inn Partnership, 517 F.2d 510, 512 (9th Cir.1975) (cited in Hall, 15 B.R. at 917 [In re Hall, 15 BR 913 (9th Cir. BAP 1981)]).

Thus, unless the IRS consents to dismissal, I will not order it in this case. This memorandum is not intended to reflect on the merits of whether the taxes Mr. Willison is worried about are in fact nondischargeable.

DATED:  January 21, 1993

HERBERT A. ROSS
U.S. Bankruptcy Judge