Pitts

ORDER AFFIRMING BANKRUPTCY COURT’S DECISION

I. INTRODUCTION

When a general partnership fails to pay required federal taxes, how can the Internal Revenue Service (“IRS”) recover those obligations from general partners? The United States Supreme Court resolved many issues relating to general-partner liability for unpaid partnership tax debts in United States v. Galletti, 541 U.S. 114 , 124 S.Ct. 1548 , 158 L.Ed.2d 279 (2004). But the Court also left many issues unresolved, including whether the IRS could employ administrative-collection procedures against the general partner and whether a federal or state statute of limitations applies to the IRS’s collection efforts. Those unsettled issues are now squarely before the Court for resolution.

Appellant Wendy K. Pitts was a general partner of DIR Waterproofing, a California general partnership. DIR failed to pay several employment taxes, and the IRS recorded Notices of Federal Tax Liens against Pitts’s property in her personal capacity. After she filed for Chapter 7 bankruptcy, Pitts filed an adversary proceeding against the United States seeking to invalidate the liens and discharge any tax liability she had stemming from DIR. The…