James A. Sowers v. State Board of Equalization of the State of California

TRASK, Circuit Judge:

We are called upon here to examine the jurisdiction of the bankruptcy court over a state imposed tax fraud penalty.

In 1974, appellant came under investigation by the California State Board of Equalization (the Board) for tax deficiencies. The probe resulted in a deficiency assessment of $12,535.13 which included a penalty of $2,342.02 for “fraud or/and attempt to evade” taxes under Cal.Rev. & Tax Code § 6485.

Thereafter, on November 7, 1974, appellant filed a voluntary petition in bankruptcy under Chapter XI of the Act. In the proceedings in bankruptcy, the judge made a…