Paul F. Bruning v. United States

Paul F. Bruning has been through bankruptcy. At adjudication one of his debts was to the United States for withholding and social security taxes for the fourth quarter of the year 1951. The government participated in the bank ruptcy estate, but its claim was only partially satisfied on distribution.

Bruning is entitled to an income tax refund for later years unless the government can offset the refund by charging him post bankruptcy interest (that is, after adjudication). The case gets into court because Bruning has filed claims with the director of internal revenue for a refund which were denied. So he sought in the district court to obtain the money from the United States. This he was denied by the district court. Bruning v. United States, D.C., 192 F.Supp. 826 . Although it probably sets up a conflict with United States v. Mighell, 10 Cir., 273 F.2d 682 , 77 A.L.R.2d 1119 , we choose to follow our trial court’s decision.

Section 17, sub. a of the Bankruptcy Act ( 11 U.S.C. § 35 , sub. a) provides as follows:

Obviously, under the above section insofar as the principal amount of tax debt was not satisfied out of the bankruptcy estate, the taxpayer would remain liable after his…