NOT FOR PUBLICATION
MEMORANDUM OF DECISION
JULIA W. BRAND, Bankruptcy Judge.
Before the Court is an objection to claim ("Claim Objection") (Docket No. 43) filed by debtor Lance Arthur Keating ("Debtor"). Debtor requests that the Court disallow the proof of claim filed by the Internal Revenue Service ("IRS"), on the grounds that Debtor does not owe any income taxes for the years in question. The IRS opposes Debtor's Claim Objection and argues that the Court should overrule it for procedural and substantive deficiencies.
A hearing on the Claim Objection was held on May 10, 2017 at 2:30 p.m. The Court heard oral argument and took the matter under submission. Based on the pleadings, record, and oral argument of counsel, and for the reasons that follow, the Court overrules the Claim Objection.
I. STATEMENT OF FACTS
Debtor filed a voluntary Chapter 13 bankruptcy petition on April 15, 2016. The general claims bar date was set for August 29, 2016, while the government claims bar date was set for October 12, 2016.
On August 10, 2016, the IRS filed its proof of claim ("IRS Claim"), which appears as Claim No. 2-1 on the Court's Claims Register for this case. The IRS alleges that Debtor is delinquent on his income taxes for tax years 2012 through 2015, in the total amount of $3,066.28. The IRS has classified its entire claim as a priority unsecured claim.
Debtor filed his Claim Objection on March 7, 2017 and initially set the matter for hearing on April 26, 2017. Debtor subsequently filed two amended notices of hearing: one on April 13, 2016, providing notice of the Claim Objection hearing on April 26, 2017, and another on April 19, 2017, providing notice that the Claim Objection hearing was continued to June 7, 2017. The Court then advanced the Claim Objection hearing to May 10, 2017 on its own motion and provided notice to all interested parties.
In his Claim Objection, Debtor argues that he was not required to file or pay income taxes for the years at issue because (1) the filing and payment of federal income taxes is voluntary; (2) Debtor has no income that can be taxed; and (3) Debtor is neither a resident nor a citizen of the United States. In opposing Debtor's Claim Objection, the IRS contends that (1) service of the Claim Objection was improper under Local Bankruptcy Rule 2002-2(c)(2); (2) Debtor has failed to present any evidence to overcome the prima facie validity of the IRS Claim, especially since Debtor had cancellation of debt income in the amount of $453,822.00 for tax year 2015; and (3) Debtor has not asserted a valid basis for disallowance of the IRS Claim under § 502(b). In response to the IRS's arguments, Debtor asserts that (1) service of the Claim Objection was proper, since Debtor served all parties entitled to notice on April 13, 2017; (2) the 2015 cancellation of debt income is based on a fraudulent filing made by Fay Servicing, LLC; and (3) Debtor has provided a valid basis for disallowance of the IRS Claim, as Debtor offered to pay his outstanding tax obligations, but such offer went unanswered. Debtor also adds a new argument to his reply, contending that the Internal Revenue Code is unenforceable because Congress never codified it into positive or special law.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(b) and 1334(b). This matter is a core proceeding under 28 U.S.C. § 157(b)(2)(B). Venue is proper in this Court. 28 U.S.C. § 1409(a) (2012).
Service of the Claim Objection Was Sufficient.
Local Bankruptcy Rule 3007-1(b) requires a claim objection to be set for hearing on at least 30 days' notice and served on the claimant "at the address disclosed by the claimant in its proof of claim and at such other addresses and upon such other parties as may be required by FRBP 7004 and other applicable rules." Local Bankruptcy Rule 2002-2 sets out requirements for notice to and service upon the United States and federal agencies, including the IRS.
Here, Debtor served the initial notice of hearing, for April 26, 2017, and the Claim Objection only on the Tax Division at the United States Attorney's Office in Los Angeles. That address is not the address for notice listed on the IRS Claim and does not match any of the addresses listed in the Court Manual for service on the IRS; the United States; the Attorney General in Washington, D.C.; or even the United States Attorney in Los Angeles. Nevertheless, despite any service deficiencies that may be present here, the IRS in fact received notice and service of the Claim Objection and provided a substantive response. Thus, the Court concludes that the IRS was not prejudiced by the lack of proper notice, and the Court considers the merits of the Claim Objection in the sections that follow.
Debtor Has Failed to Present Sufficient Evidence to Overcome the Prima Facie Validity of the IRS Claim.
A proof of claim filed in accordance with the Federal Rules of Bankruptcy Procedure constitutes prima facie evidence of the validity and the amount of the claim, and the claim is deemed allowed unless a party in interest objects. Fed. R. Bankr. P. 3001(f); 11 U.S.C. § 502(a) (2012). When a claim objection is filed, a proof of claim provides "some evidence as to its validity and amount" and is "strong enough to carry over a mere formal objection without more."
The objecting party bears the burden of presenting sufficient evidence to overcome the claim's presumptive validity and must "`show facts tending to defeat the claim by probative force equal to that of the allegations of the proofs of claim themselves.'"
Here, the IRS Claim includes evidence of Debtor's alleged tax liability for the relevant years. Thus, the IRS Claim is presumed valid, unless Debtor presents sufficient evidence to show that the claim amount is incorrect or that he does not owe the taxes at issue.
In this regard, Debtor has not carried his burden. The evidence attached to Debtor's Claim Objection consists of (1) the IRS's letter to Debtor inquiring about the missing tax returns for 2012 through 2015; (2) the mailing receipt for Debtor's response to the IRS's inquiry; (3) Debtor's response to the IRS's inquiry, consisting of his declaration and certain demands; (4) a declaration that Debtor filed in this case,
Thus, the IRS Claim remains prima facie valid.
Debtor Has Failed to Show Grounds for Disallowance Under § 502(b), as Debtor's Arguments Regarding the Enforceability of the IRS Claim are Patently Frivolous.
If a party objects to a proof of claim, the bankruptcy court "shall" determine the amount of such claim and allow such claim, except to the extent that one of the limited grounds for disallowance is established. 11 U.S.C. § 502(b). The list of grounds for disallowance provided in § 502(b) is exhaustive.
Here, although the IRS contends that Debtor has not raised any grounds for disallowance under § 502(b), the Court construes Debtor's Claim Objection as arguing that the IRS Claim is unenforceable against him pursuant to § 502(b)(1).
As noted previously, Debtor contends that the IRS cannot collect any income taxes from him for 2012 through 2015 because (1) the filing and payment of federal income taxes is voluntary; (2) Debtor has no income that can be taxed; (3) Debtor is neither a resident nor a citizen of the United States; and (4) the Internal Revenue Code is unenforceable, since it is neither positive nor special law. While Debtor may harbor a good faith belief in the validity of these arguments, the fact remains that courts from virtually every circuit, along with the United States Supreme Court, have rejected these arguments as absurd and meritless. As a general matter, the Court agrees with those circuit courts that "perceive no need to refute these arguments with somber reasoning and copious citation of precedent," since "to do so might suggest that these arguments have some colorable merit."
First, neither the filing of income tax returns nor the payment of federal income taxes is voluntary. The Internal Revenue Code explicitly requires taxpayers to file income tax returns and to pay income taxes each year. 26 U.S.C. § 6011(a) (2012) ("[A]ny person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return or statement according to the forms and regulations prescribed by the Secretary."); 26 U.S.C. § 6151(a) ("[W]hen a return of tax is required under this title or regulations, the person required to make such return shall, without assessment or notice and demand from the Secretary, pay such tax. . . ."). Based on this statutory mandate, courts have consistently rejected the notion that the filing or payment of income taxes is voluntary.
Second, all income, regardless of its source, is generally taxable.
Third, courts have repeatedly rejected the argument that a person is exempt from paying income taxes based solely on his belief that he is not a citizen or resident of the United States.
Finally, the Internal Revenue Code is positive law because it is included as Title 26 of the current edition of the United States Code.
Therefore, based on the foregoing, the Court finds that all of Debtor's arguments regarding the enforceability of the IRS Claim are patently frivolous, and none of them constitute grounds for disallowing the IRS Claim under § 502(b)(1).
In summary, the Court holds that Debtor's Claim Objection suffers from both procedural and substantive defects. Debtor's service of the Claim Objection is improper, as all parties who were entitled to notice were not timely served. Further, Debtor failed to provide sufficient evidence to overcome the IRS Claim's presumptive validity, and Debtor did not provide any legitimate grounds for disallowance of the IRS Claim under § 502(b). Accordingly, the Court overrules Debtor's Claim Objection.
A separate order consistent with this memorandum of decision will be entered.