b. Bankruptcy Court discretion to hear the matter
See also remarks at subsection (e)
Although the bankruptcy court has jurisdiction, the exercise of its jurisdiction is discretionary with the court.
Bankruptcy Rule 5010 and Bankruptcy Code § 350(b) permit the court to reopen a closed case to, among other things, "administer assets, to accord relief to the debtor, or for other cause." And the bankruptcy court has jurisdiction to adjudicate violations of the automatic stay pursuant to 11 U.S.C. § 105 and 362(h), and to adjudicate actions to recover money pursuant to Rule 7001(1).
Held, even after the trustee had abandoned the estate's claim to the debtor's tax refund, the bankruptcy court retained jurisdiction to determine the extent of the debtor's right to a tax refund, based on language of 11 U.S.C. § 157(b)(2)(O), which includes in core proceedings "other proceedings affecting ... the adjustment of the debtor-creditor ... relationship ..." In re Steven G. Dunmore 254 B.R. 761 (N.D. Cal. 2002).
Held, "Bankruptcy courts generally abstain from determining tax liability in no-asset Chapter 7 cases." In re Dees, 369 B.R. 676 (Bankr. N.D. Fla. 2007). The court, in electing to abstain from addressing the debtor's liability in a fully administered no-asset Chapter 7 case, cited authority for the proposition that section 505 is basically for creditors to adjudicate liability for taxes, where it affects distribution from an asset Chapter 7 case, and where non-bankruptcy issues...
