P.R. Treasury Department Again Violates Automatic Stay The PRTD sent a chapter 13 debtor a “Payment Notice of Second Installment of Individual Income
P.R. Treasury Department Again Violates Automatic Stay The PRTD sent a chapter 13 debtor a “Payment Notice of Second Installment of Individual Income
Tax Return.” The notice pertained to a pre-petition debt but was sent post-petition. It instructed the debtor when and how to make the payment that was due. Also, it explained the consequences of non-payment, including accumulation of interest and
surcharges, and collection referral. The debtor filed a claim under 11 U.S.C. §362(k). She said the PRTD's action harmed her economically and emotionally.
The PRTD argued that the notice was not a collection attempt because it was not sent by the PRTD’s collection department, but rather by its return processing department. It also claimed that the notice merely informed the debtor of the expiration of the extension of time she requested.
Additionally, the PRTD asserted that the debtor had not standing because she did not allege any concrete harm. Further, the PRTD argued that its actions were expressly exempted from the automatic stay by 11 U.S.C. §362(b)(9)(D) because the notice was an assessment of tax liability.
Judge Godoy granted partial summary in favor of the debtor. First, the court noted that the PRTD “presented no evidence whatsoever to disprove any of [the debtor’s] alleged injuries and failed to explain why these alleged injuries are not sufficiently concrete or particularized, why there is not a causal connection, and why it is not likely that these injuries would be redressed by a decision favorable to [the debtor].” The court rejected the PRTD’s defense under Section 362(b)(9)(D), finding that there was no evidence that the tax liability at issue was actually assessed.
It further found that the notice was an attempt to collect a pre-petition debt because it “instructed [the debtor] how and when to make payment […] [as well as] the consequences of not paying on time.” The court also noted that the PRTD “failed to establish the necessary mechanisms to avoid collection efforts to [the debtor].” This last point is worth emphasizing. Last march, Judge Lamoutte found the PRTD liable for violating the discharge injunction. In that case, the court noted “that [it was] not the first time the Treasury has blamed its SURI Portal for its own shortcomings.” There is clearly a problem with how SURI communicates with taxpayers who are in bankruptcy or who have received a discharge.
This problem is costing the PRTD a significant amount of money in defending suits and, ultimately, in complying with judgments for violations of the automatic stay or the discharge injunction.