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essential to the final judgment; (4) the party against whom
estoppel is invoked was fully represented in the prior action.
La Preferida, Inc. v. Cerveceria Modelo, 914 F.2d 900, 906 (7th
Cir. 1990). The application of collateral estoppel in the case
at hand is not justified because prerequisites (1), (2), and (3)
are not satisfied.
Collateral estoppel does not apply to the case at hand
because we are deciding an issue that was not litigated in and
decided by the bankruptcy court. According to petitioner, the
issue decided by the bankruptcy court was whether tentative
refunds paid to petitioner “after it left the group were
nonrebate refunds”. Petitioner contends that the issue in the
case at hand is “precisely identical” to the issue decided by the
bankruptcy court and that “the facts relating to [petitioner’s]
authority to receive the refunds have now been conclusively
established.” We disagree.
The issue the bankruptcy court was asked to decide was
whether the 1981, 1984, and 1985 tentative refunds were
collectible. The bankruptcy court found that the 1985 tentative
refund was not collectible because, under Interlake Corp. v.
Commissioner, supra, it was a nonrebate refund that respondent
could recover only in an erroneous refund action under section
7405, for which the period of limitations had expired. The
linchpin of the bankruptcy court’s nonrebate conclusion was that
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