Posted by NCBRC - September 15th, 2016
Whether a post-assessment tax return represents an honest and reasonable attempt to comply with tax laws and is a “return” within the meaning of section 523(a)(*), depends on the taxpayer’s subjective intent and the content of the information provided in the late-filed return. Biggers v. I.R.S., No. 15-41 (M.D. Tenn. Sept. 9, 2016).
After Pamela and James Biggers failed to file tax returns for several years, the IRS assessed federal taxes against James. In February, 2007, approximately one year after the IRS performed its final tax assessment, the Biggers filed joint tax returns for the years that had been assessed against James. Their returns showed different tax liability than that which had been determined by the IRS with several years claiming a lower liability and one year claiming higher liability. The Biggers then filed a chapter 7 bankruptcy petition and sought to discharge their tax debts for those years. Read More
Posted by NCBRC - August 15th, 2016
A tax return filed seven years after it was due and three years after the IRS conducted its independent assessment does not meet the test for an “honest and reasonable” attempt to comply with tax laws. Smith v. IRS, No. 14-15857 (9th Cir. July 13, 2016). Read More
Posted by NCBRC - April 15th, 2016
The Eleventh Circuit applied the Beard test to the question of whether and when a late-filed tax return is a “return” for purposes of dischargeability. The court adopted the middle ground finding that timing is relevant to the issue of the debtor’s “honest and reasonable” attempt to comply with tax laws. Justice v. U.S.A., No. 15-10273 (11th Cir. March 30, 2016). Read More
Posted by NCBRC - January 12th, 2016
The Bankruptcy Appellate Panel for the Ninth Circuit found that the bankruptcy court erred by failing to follow Ninth Circuit precedent when it held that a late-filed tax return is a “return” for purposes of dischargeability so long as it meets the objective test of proper form and substance. United States v. Martin, No. 14-1180 (B.A.P. 9th Cir. Dec. 17, 2015). Read More
Posted by NCBRC - October 6th, 2015
The bankruptcy court for the district of New Jersey bucked the current trend, and “agree[d] with those decisions that hold that the timing of the filing is not a factor in determining whether the document meets the definition of a ‘return.’”In re Davis, No. 14-26507 (Bankr. D. N.J. Sept. 29, 2015). See also, In re Maitland, 531 B.R. 516 (Bankr. D. N.J. 2015). Read More
Posted by NCBRC - February 19th, 2015
In re McCoy, , a case that should have been relegated to the realm of judicial outliers has instead advanced another step through the circuit courts. First it toppled the Tenth Circuit in In re Mallo, 2014 WL 7360130 (10th Cir. Dec. 29, 2014), and now the First Circuit has likewise found that a late-filed Massachusetts state income tax return does not constitute a “return” for dischargeability purposes under section 523(a). Fahey v. Mass. Dept. of Rev., No. 14-1328; Perkins v. Mass Dept. of Rev., No. 14-1350, Gonzalez v. Mass. Dept. of Rev. No. 14-9002; Brown v. Mass. Dept. of Rev. No. 14-9003 (February 18, 2015). Read More
Posted by NCBRC - January 16th, 2015
The Tenth Circuit has concluded that late-filed tax returns are not “returns” for dischargeability purposes unless filed by the IRS in cooperation with the debtor. Mallo v. IRS (In re Mallo), __ F.3d __, 2014 WL 7360130 (Dec. 29, 2014) (consolidated with In re Martin, 14-1488). Read More
Posted by NCBRC - November 18th, 2014
The IRS has filed an amicus brief in the First Circuit taking the position that the Fifth Circuit erred in McCoy v. Miss. State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012), when it held that a late-filed return can never be a “return” for dischargeability purposes unless filed under IRC section 6020(a). Wood v. Mass. Dept. of Rev., Nos. 14-9004, 14-9006 and Pendergast v. Mass. Dept. of Rev., 14-9005, 14-9007 (1st Cir.) (amicus brief filed Nov. 4, 2104). Read More
Posted by NCBRC - May 19th, 2014
Massachusetts law treats post-assessment, late-filed, tax returns as “abatement applications” and, therefore, any tax liability based on those documents is nondischargeable. Pendergast v. Mass. Dept. of Rev. (In re Pendergast), No. 13-32 and Wood v. Mass. Dept of Rev. (In re Wood), No. 13-058 (B.A.P. 1st Cir. May 2, 2014). Read More
Posted by NCBRC - April 12th, 2014
In the most recent case to find its way to the First Circuit Court of Appeals, the BAP rejected McCoy and found that there is no per se rule that a late-filed tax return can only be a “return” for bankruptcy discharge purposes if it is filed by the IRS under the “safe harbor” provision of IRC § 1060(a). Brown v. Mass. Dept. of Rev., No. 13-27 (B.A.P. 1st Cir. April 3, 2014). There, the debtor argued that Massachusetts law “permits a taxpayer, once notified by the commissioner of its failure to file a return, to still file a proper return within 30 days before a tax will be assessed.” Where the debtor complied with all elements of a return as required by state filing laws, the fact that the return itself was filed late, did not change the fundamental nature of the document. Relying on its reasoning in Gonzalez v. Mass. Dept. of Rev., 2014 WL 888460, (March 6, 2014), the Bankruptcy Appellate Panel agreed. The panel found that the bankruptcy court had correctly rejected the “draconian” rule set forth in McCoy v. Miss. State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012). In Gonzalez the court noted that section 523(a)(1)(B)(ii) makes specific provision for nondischargeability of tax returns filed both late and within two years of bankruptcy. Therefore, it found that untimeliness of filing alone was not intended to preclude discharge of tax liabilities.
The MDOC has filed an appeal to the First Circuit, No. 14-9003, where it will join three other cases: In re Perkins, No. 14-1350; In re Fahey, No. 14-1328 (both adopting McCoy); and In re Gonzalez, No. 14-9002 (rejecting McCoy).
Brown opinion 1st BAP