District Court Affirms $4,000.00 Judgment for Emotional Distress Damages against IRS for Automatic Stay Violations

District Court Affirms $4,000.00 Judgment for Emotional Distress Damages against IRS for Automatic Stay Violations

On June 20, 2019 the United States District for the District of Oregon affirmed the Bankruptcy Court’s judgment against the IRS.

This decision is the latest chapter of a long road to enforce the automatic stay. The Debtors are represented by NACBA member Keith Karnes of the Karnes Law Offices, PC in Salem, Oregon.

On November 5, 2012, the Debtors filed for Chapter 13 bankruptcy protection which triggered the automatic stay.

On December 2, 2013, the IRS sent the first of four notices to the Hunsakers demanding payment for back taxes. The notice bore the headlines “Final Notice” and “Notice Of Intent to Levy And Notice Of Your Right To A Hearing.” The IRS sent three similar notices on February 10, 2014, September 1, 2014, and December 8, 2014. Each notice violated the automatic stay. After each notice, the Hunsakers contacted their attorney and the attorney contacted the IRS notifying it of the automatic stay. The Hunsakers alleged the violations caused them significant emotional harm. The parties agreed the IRS violated the automatic stay four times.

On December 5, 2014, the Debtors filed an adversary proceeding against the IRS for violation of the automatic stay. On January 27, 2016, the Bankruptcy Court entered judgment in favor of the Debtors in the amount of $4,000.00 for emotional distress damages. The IRS appealed to the District Court.

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