Opinion
CASE NO. 02-00373-8B3
October 30, 2003
ORDER ON DEBTORS'EMERGENCY MOTION FOR SANCTIONS AND INJUNCTIVE RELIEF AND OTHER RELIEF
THIS CAUSE having come before the Court on October 7, 2003, upon the Debtors' Emergency Motion for Sanctions and Injunctive Relief and Other Relief, and upon the Opposition by the United States of America to Debtors' Emergency Motion for Sanctions and Injunctive Relief and Other Relief, and the Court having reviewed the pleadings and having heard argument of counsel for the Debtors and the United States of America, and being fully advised in the premises, the Court hereby finds:
1. That Debtors, filed a Chapter 13 Bankruptcy on January 8, 2002.
2. That, although the Internal Revenue Service was listed as a Creditor in the Bankruptcy, the Internal Revenue Service did not file a claim in the Chapter 13 Bankruptcy.
3. That on July 30, 2002, an Order Confirming Plan was entered.
4. That on or about May 26, 2003, the Internal Revenue Service applied the Debtors' tax refund in the amount of $1,074 for the tax period ended December 31, 2001 to the alleged taxes owed for the tax period ended December 31, 2000.
5. That on September 5, 2003, the Internal Revenue Service levied on the wages of the Debtor, Edgar Letona, and levied $881.64 and on September 30, 2003, the Internal Revenue Service levied and took $1145.23 from the Debtor Edgar Letona's wages.
6. The Internal Revenue Service/United States of America has admitted in Court that the levy against the wages of the Debtor was in violation of the automatic stay of the Bankruptcy Court.
7. While the Internal Revenue Service/United States of America has argued that they are an entitled to an administrative freeze on the tax refund for 2001 of the Debtors, the Court finds that the claim of the Internal Revenue Service as of the date of the filing of the Bankruptcy Petition was barred because they did not file a claim and the administrative freeze was improper.
8. The funds now held by the Internal Revenue Service/United States of America in an administrative freeze in the amount of $1,074 should be returned to the Debtor within thirty (30) days of date of this Order.
9. The sums levied by the Internal Revenue Service/United States of America against the wages of the Debtor Edgar Letona in the total amount of $2,026.87 should be returned to the Debtor within thirty (30) days of date of this Order.
10. Debtors have incurred legal expenses and costs as a result of the violation of the automatic stay by the Internal Revenue Service/United States of America.
It is hereby
ORDERED AND ADJUDGED that:
A. The Internal Revenue Service/United States of America has violated the automatic stay of the Bankruptcy Code by levying on the wages of the Debtor and by placing an administrative freeze on the 2001 tax refund of the Debtors;
B. The Internal Revenue Service/United States of America shall return the funds levied against the wages of the Debtor to the Debtor within thirty (30) days of this Order;
C. The Internal Revenue Service/United States of America shall return the 2001 tax refund in the amount of $1,074 to the Debtors within thirty (30) days of this Order;
D. In the alternative, in the event there is some basis in law under the circumstances herein that the administrative freeze with regard to the tax refund of the Debtors for 2001 should lock in these funds, then this Court imposes sanctions against the Internal Revenue Service/United States of America to return these frozen funds as a sanction, assuming that the United States of America had any rights to them in the first place;
E. The Debtors are entitled to reasonable attorney fees and court costs as an appropriate sanction from the Internal Revenue Service/United States of America;
F. Counsel for the Debtors shall file an Affidavit and an Application for Fees in accordance with In Re: Bilgutay 108 B.R. 333 within thirty (30) days of this Order. The Internal Revenue Service/United States of America shall have thirty (30) days from the filing of the attorney Affidavit and Application for Fees to file its Objection;
G. The Court will either set a hearing on the Application for Fees and objection thereto, if any, and/or will determine `reasonable fees and costs without hearing.
DONE AND ORDERED at Tampa, Florida,