United States ex rel. Internal Revenue Service v. Galletti (In re Galletti)

Debtors Abel Cosmo Galletti, Sarah Galletti, Francesco Briguglio, and Angela Briguglio filed Chapter 13 bankruptcy petitions. The United States Internal Revenue Service (IRS) filed proofs of claim against Debtors for unpaid employment taxes assessed against a partnership in which Debtors were general partners. The bankruptcy court disallowed the IRS’s claims, and the district court affirmed. We also affirm. The IRS’s claims were properly disallowed because (1) the IRS cannot collect a partnership’s tax deficiency directly from the partners without first making individualized assess- *1109 merits against the partners or obtaining judgments against the partners holding them jointly and severally liable for the partnership’s tax debts; and (2) the statute of limitations now bars the IRS from making such individual assessments or obtaining such judgments.

FACTUAL AND PROCEDURAL BACKGROUND

Debtors were general partners of Marina Cabrillo Partners (the Partnership). From 1992 to 1995, the Partnership failed to pay the requisite amount of federal employment taxes, prompting the IRS to assess those unpaid taxes against the Partnership in 1994,1995, and 1996.

On October 20,…