In re: WENDY K. PITTS v. United States of America

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: WENDY K. PITTS,
Debtor,
WENDY K. PITTS, faw DIR Water
Proofing and Wadsworth General
Contracting faw Wadsworth Glazing Inc.,
Appellant,
v.
UNITED STATES OF AMERICA,
Appellee.
No. 14-56502
D.C. No. 5:13-cv-02099-ODW
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Otis D. Wright II, District Judge, Presiding
Submitted August 31, 2016**
Pasadena, California
Before: SILVERMAN, FISHER, and WATFORD, Circuit Judges.
FILED
SEP 02 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).

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Wendy Pitts appeals the district court’s judgment, affirming the bankruptcy
court, in Pitts’s adversary proceeding seeking to discharge federal tax liens. We
review the district court’s decision on appeal from a bankruptcy court de novo, and
we affirm. Barrientos v. Wells Fargo Bank, N.A., 633 F.3d 1186, 1188 (9th Cir.
2011).
Pitts was a general partner in D I R Waterproofing, and the United States
liened Pitts’s personal property after DIR failed to pay trust fund and employment
taxes assessed against DIR. Pitts concedes that, as a general partner, she is liable
for the partnership’s debts under state law. She argues, however, that the United
States may not use administrative enforcement procedures against her – instead,
because her liability arises from state partnership law, the United States is confined
to remedies under state law. We disagree.
First, pursuant to the plain language of 26 U.S.C. § 6321, Pitts is a “person
liable to pay any tax,” and a lien in favor of the government arises by operation of
federal law. See In re Crockett, 150 F .Supp. 352, 354 (N.D. Cal. 1957)
(California partner was liable for debts of partnership under state law; accordingly,
partner was liable for entire amount of partnership’s employment taxes, and was
“person liable to pay” under § 6321’s identically worded predecessor); see also
Bresson v. C.I.R., 213 F.3d 1173, 1178 (9th Cir. 2000) (where the IRS relied on
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state law to establish an individual’s liability, “the government’s underlying right
to collect money in this case clearly derives from the operation of federal law (i.e.,
the Internal Revenue Code)”).
Second, the United States may utilize administrative enforcement procedures
to collect the debt from Pitts, because she is secondarily liable for DIR’s assessed
debt. See United States v. Galletti, 541 U.S. 114, 122 (2004) (“After the amount of
liability has been established and recorded, the IRS can employ administrative
enforcement methods to collect the tax”). The United States is not obligated to
make a second assessment against Pitts individually, because the consequences of
its assessment attach to the assessed debt “without reference to the special
circumstances of the secondarily liable parties.” Id. at 123.
Pitts next argues that the United States is bound by the state’s statute of
limitation in its efforts to collect DIR’s debt from her. Again, we disagree.
The United States is not subject to a state statute of limitations when it
attempts to enforce a claim created by federal statute and proceeds in its sovereign
capacity to enforce that claim. Bresson, 213 F.3d at 1177. Here, the United States’
right to collect money in this case derives from the operation of federal law –
namely, the Internal Revenue Code. Id. at 1178. Also, the United States
unquestionably acts in its sovereign capacity when it attempts to collect taxes. Id.
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Finally, Pitts argues that the taxes are dischargeable in her chapter 7
bankruptcy proceeding, and that the United States’s continuing lien violates the
discharge injunction contained in 11 U.S.C. § 524(a)(2), again because she
contends that the underlying obligations are not federal taxes, but instead are state
law partnership debts. For the reasons stated above, we again disagree.
We do not reach Pitts’s argument that she is entitled to an Article III
adjudication of her status as a partner, because she did not raise this argument
below. We note that, before the bankruptcy court, she conceded her status as a
general partner in the parties’ joint statement of stipulated facts, and in her second
amended complaint.
AFFIRMED.
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