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PROBATE 17: Government contends it satisfied statute of limitations by filing proof of claim in probate proceeding.

In this case, the government assessed decedent $140,903 in income tax for the 2002 tax year. Decedent died in the fall of 2006 having not paid the assessed taxes. On May 4, 2007, decedent’s personal representative published a notice to creditors of the four-month deadline for presenting claims, but he did not mail the notice to the government despite it being a known creditor of the estate. On January 29, 2009, the government filed a proof of claim in the probate proceeding concerning the tax assessment. Decedent’s personal representative has not responded to the government’s proof of claim, and the probate process is ongoing.

The government filed this collections proceeding on March 11, 2016.

At the heart of this dispute is the statute of limitations in 26 U.S.C. § 6502(a), which provides that, after the government assesses a tax, such tax may be collected by levy or by a proceeding in court, but only if the levy is made or the proceeding begun within 10 years after the assessment of the tax.

The government contends that it satisfied the statute by filing its proof of claim in decedent’s probate proceeding. The government’s case rests on two propositions: first, that the proof of claim is a proceeding in court for purposes of § 6502(a); and second, that any timely filed proceeding in court satisfies the statute of limitations, meaning that additional proceedings can be filed anytime thereafter.

The nature, function, and effect of a proof of claim in Michigan has significant legal consequences, it qualifies as a proceeding in court under § 6502(a). The Michigan probate code states that for purposes of a statute of limitations, the proper presentation of a claim is equivalent to commencement of a proceeding on the claim. Mich. Comp. Laws § 700.3802(3). The submission of a proof of claim requires the estate to provide notice that the claim is not allowed, otherwise the claim is deemed automatically allowed.

Having determined that the proof of claim qualifies as a proceeding in court, we turn to the second issue: whether the timely filed proof of claim satisfied the statute of limitations for this action. We hold that the statute of limitations in § 6502(a) is satisfied once the government commences any timely proceeding in court.  There is no requirement that each proceeding related to the same assessment be brought within ten years, so long as at least one was filed within the ten-year period.

The government here filed its proof of claim in 2009, well within the ten-year limitations period for the 2005 assessment.  The proof of claim qualifies as a proceeding in court under § 6502(a). Because it was filed within the ten-year limitations period, that the proof of claim satisfied the statute of limitations and thus that the statute of limitations does not bar the government’s collection effort.

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