NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted December 19, 2011*
Decided December 19, 2011
Before
KENNETH F. RIPPLE, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
ANN CLAIRE WILLIAMS, Circuit Judge
No. 11‐2192
In the Matter of: GARY L. PANSIER Appeal from the United States District
and JOAN R. PANSIER, Court for the Eastern District of Wisconsin.
Debtors.
No. 10‐C‐1011
GARY LEE PANSIER and
JOAN RENEE PANSIER, William C. Griesbach,
Plaintiffs‐Appellants, Judge.
v.
INTERNAL REVENUE SERVICE,
Defendant‐Appellee.
O R D E R
For over a decade, Gary and Joan Pansier have wrangled with the Internal Revenue
Service and the state of Wisconsin over unpaid income taxes. See, e.g., In re Pansier, 417 F.
App’x 565 (7th Cir. 2011); United States v. Pansier,
576 F.3d 726 (7th Cir. 2009); Pansier v.
United States, No. 09‐2450, ECF No. 22 (Bankr. E.D. Wis. Sept. 28, 2010); Pansier v. United
States,
225 B.R. 657 (E.D. Wis. 1998). In this appeal, the Pansiers contend that the bankruptcy
*
After examining the briefs and record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and record. See FED. R. APP. P.
34(a)(2)(C).
No. 11‐2192 Page 2
court erred in concluding that their federal income tax liability for the years 1995 through
2006 was not discharged by their bankruptcy. We affirm the judgment.
The current dispute dates to late 2008 when the Pansiers petitioned for relief under
Chapter 7 of the Bankruptcy Code. The bankruptcy court granted a general discharge and
then, in June 2009, closed the case. But as is typical under Chapter 7, the bankruptcy judge
did not specify which debts had been discharged. See
11 U.S.C. § 727(b). The IRS and the
Wisconsin Department of Revenue took the position that the Pansiers’ tax debts were
exempt from discharge, and thus in August 2009 the bankruptcy court reopened the case on
the debtors’ motion to resolve that question. The Pansiers then filed parallel adversary
complaints against the IRS1 and the Wisconsin Department of Revenue, and in both actions
they sought a declaration that their unpaid taxes had been discharged. See FED. R. BANKR. P.
4007(a), (b). The state taxes were the subject of a previous appeal. In re Pansier, 417 F. App’x
565 (7th Cir. 2011). The case before us now arises from federal income taxes assessed for the
years 1995 through 2006.
The adversary complaint against the IRS was not filed until November 2009. Before
that, Gary Pansier had been pursuing a petition he filed in the United States Tax Court in
2006 to enjoin the IRS from levying against his income. The IRS countered that the Tax
Court lacked subject‐matter jurisdiction, but before that argument finally prevailed in
August 2009, see Pansier v. C.I.R. No. 15849‐06 (T.C. Aug. 11, 2009), the IRS had mistakenly
asserted that the Pansiers did not have an income tax liability arising from the years 1999
through 2006. That slip would soon become a linchpin of the Pansier’s adversary action in
the bankruptcy court.
In bankruptcy court the Pansiers and the IRS filed cross‐motions for summary
judgment. The IRS relied upon
11 U.S.C. § 523(a)(1)(B), which exempts from discharge a tax
“with respect to which a return, if required,” was never filed or, if filed late, did not precede
the bankruptcy petition by at least two years. According to the IRS, the Pansiers did not file
income tax returns for 1995 through 2006 until after they had petitioned for bankruptcy.
Those returns were “required,” according to an IRS employee, because the Pansiers had
received sufficient income to incur a tax liability in each year from 1995 through 2006. The
receipt of substantial income is confirmed by the Pansiers’ untimely returns, in which they
themselves report unpaid income tax liability for each year.
1
The Pansiers named the IRS as defendant, but a lawsuit nominally against the IRS is
really a suit against the United States. See Szopa v. United States,
453 F.3d 455, 456 (7th Cir.
2006); Blachy v. Butcher,
221 F.3d 896, 909‐10 (6th Cir. 2000); Freck v. IRS,
37 F.3d 986, 989 n.1
(3d Cir. 1994). For simplicity, we refer to the defendant as the IRS.
No. 11‐2192 Page 3
The Pansiers responded with a two‐part argument, the first applying to the years
1995 though 1998, and the second applying to 1999 through 2006. For the earlier group of
years, the Pansiers asserted that, in fact, they had filed tax returns more than two years
before petitioning for bankruptcy. As evidence they pointed to a certified IRS transcript of
account, which, they say, documents the receipt of returns for 1995 and 1996 on April 22,
1997, and for 1997 and 1998 on August 23, 1999. The IRS agreed that returns were deemed
received on those two dates, although not returns prepared or submitted by the Pansiers.
These returns, according to the IRS, were “substitute returns” authorized to be entered
electronically by the IRS for taxpayers who do not file themselves. See
26 U.S.C. § 6020(b).
The IRS produced computer printouts of the substitute returns along with affidavits from
IRS employees attesting that the April 1997 and August 1999 dates correspond to the
preparation of substitute returns, not the receipt of returns from the Pansiers. The
bankruptcy court invited the Pansiers to submit their own affidavit attesting that they had
filed the returns consistent with the dates on the IRS transcript, but the Pansiers ultimately
declined that opportunity. The passage of time, they explained, had made it impossible for
them to remember when they filed returns for these years.
For the years 1999 through 2006, the Pansiers did not claim to have filed timely
income tax returns. Instead they argued that, because the IRS had said in the Tax Court that
no income tax was owed for those years, the agency was barred by the doctrine of judicial
estoppel from taking a contrary position in the bankruptcy court. In response the IRS
argued that judicial estoppel could not apply because the Tax Court had not relied on the
agency’s misstatement, and because the misstatement resulted from a good‐faith mistake.
The bankruptcy court granted summary judgment for the IRS. The judge concluded
that the IRS had introduced undisputed evidence that the Pansiers were required to file
income tax returns for all of the years in question but had not done so more than two years
before they petitioned for bankruptcy. And as to the misstatements made by the IRS in the
Tax Court, the bankruptcy judge declined to apply judicial estoppel. The judge reasoned
that the Tax Court had not relied upon (or even mentioned) the misstatement in concluding
that it lacked subject‐matter jurisdiction. And, the bankruptcy judge continued, it would not
be appropriate to apply judicial estoppel even if the misstatement arguably could have
influenced the Tax Court because the misstatement was plainly an unintended blunder. The
Pansiers unsuccessfully appealed this decision to the district court. See
28 U.S.C. § 158(a).
In this court, the Pansiers argue that the bankruptcy judge made two errors.
Concerning the years 1995 through 1998, they contend that the existence of the IRS
transcript of account is enough to show a disputed issue of fact about whether they filed
returns for those years more than two years before petitioning for bankruptcy. And as for
the years 1999 through 2006, the Pansiers argue that the bankruptcy court erred by not
No. 11‐2192 Page 4
estopping the IRS from claiming they have a tax liability. We review the bankruptcy court’s
decision under the same standard as the district court. See Kovacs v. United States,
614 F.3d
666, 672 (7th Cir. 2010); Miller v. LaSalle Bank Nat’l Assoc.,
595 F.3d 782, 785 (7th Cir. 2010).
For the years 1995 through 1998, the evidence is undisputed that the Pansiers were
obligated to file income tax returns but failed to do so until after the two‐year deadline. The
fact that the transcript of account shows “return received” dates of April 1997 and August
1999 does not create a triable issue of fact; the IRS submitted evidence explaining that what
the agency “received” on those dates were substitute returns prepared by its own
employees, not returns filed by the Pansiers. The explanation given by the IRS for entries in
its own records was sufficient to support summary judgment, and to avoid that outcome the
Pansiers needed to supply their own evidence demonstrating a material issue of fact for
trial. See FED. R. CIV. P. 56; Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 250 (1986); Serednyj v.
Beverly Healthcare LLC,
656 F.3d 540, 547 (7th Cir. 2011). Yet the Pansiers produced no copies
of returns prepared by them in 1997 or 1999, nor did they explain why they would have
filed returns again in 2008 if they previously had filed returns for those same years. And
most telling, the Pansiers declined even to submit affidavits attesting that they had filed
returns for 1995 through 1998 before they filed their Chapter 7 petition. Instead, they
essentially intimated that the IRS employees who discussed the entries on the transcript of
account are not credible, but insinuations of dishonesty cannot establish a triable issue.
See Schuster v. Lucent Tech. Inc.,
327 F.3d 569, 578–79 (7th Cir. 2003); Corrugated Paper Prods.,
Inc. v. Longview Fibre Co.,
868 F.2d 908, 914 (7th Cir. 1989). The record as a whole is thus
amenable to one conclusion only, making summary judgment for the IRS the appropriate
outcome. See FED. R. CIV. P. 56(e); Scott v. Harris,
550 U.S. 372, 380 (2007) (“Where the record
taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there
is no genuine issue for trial.”); Outlaw v. Newkirk,
259 F.3d 833, 841 (7th Cir. 2001)
(explaining summary judgment was appropriate because“arguably inconsistent testimony”
was overborne by record “as a whole”).
As for the years 1999 through 2006, the application of judicial estoppel is a matter of
discretion. Commonwealth Ins. Co. v. Titan Tire Corp.,
398 F.3d 879, 887 (7th Cir. 2004). The
doctrine is intended to prevent the appearance that a court has been hoodwinked by a
clever litigant. See New Hampshire v. Maine,
532 U.S. 767, 750 (2001). Though not a strict
formula, three factors typify those cases in which estoppel applies: (1) a party’s prior and
current positions are clearly inconsistent; (2) that same party previously persuaded a court
to adopt its prior, inconsistent position; and (3) that party would derive an unfair advantage
from changing positions unless estopped. See
id. at 750–51; Walton v. Bayer Corp.,
643 F.3d
994, 1002 (7th Cir. 2011).
No. 11‐2192 Page 5
In this case, the bankruptcy court did not abuse its discretion in concluding that
judicial estoppel would be inappropriate because the Tax Court never adopted the IRS’s
prior, inconsistent position as to the existence of a tax liability for the years 1999 through
2006. Thus there is no risk of contrary decisions creating the appearance that one court or
another was deceived. The Tax Court never decided the amount or existence of the Pansiers’
tax liability because that court lacked subject‐matter jurisdiction. The erroneous
representation by the IRS that the Pansiers had zero liability was irrelevant to the
jurisdictional issue and was not even mentioned in the Tax Court’s decision. Accordingly,
the bankruptcy court did not abuse its discretion when it declined to estop the IRS from
asserting that the Pansiers have a tax debt for the years 1999 through 2006.
AFFIRMED.
