Posted by NCBRC - March 10th, 2014
One step forward, two steps back. Two courts out of Massachusetts reached opposite conclusions on the issue of whether a late-filed tax return may be discharged in bankruptcy. Although both courts ostensibly relied on the same Massachusetts tax law, the issue ultimately came down to differing interpretation of language in BAPCPA. In a parenthetical that packs a punch, section 523(a)(*) defines a return as “a return that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements).” The question before both courts was whether “applicable filing requirements” refers only to proper forms and documentation, or includes a timeliness factor. The BAP for the First Circuit found the former, Gonzalez v. Mass. Dept. of Rev., No. 13-26 (March 6, 2014), while a Massachusetts District Court found the latter, Perkins v. Mass. Dept. of Rev. (In re Perkins), No. 13-30107, consolidated with, Fahey v. Mass. Dept. of Rev. (In re Fahey), No. 13-11875 (D. Mass. March 7, 2014). Read More
Posted by NCBRC - November 9th, 2013
The District Court for the Middle District of Alabama kept the harsh McCoy rule alive while ultimately finding the debtor failed to file a tax “return” under the more lenient test set forth in Beard. In re Perry, No. 12-913 (Oct. 30, 2013). Read More
Posted by NCBRC - September 25th, 2013
In In re Mallo, No. 13-98 (Sept. 11, 2013), and In re Martin, No. 12-3380 (Sept. 23, 2013), the District Court in Colorado was faced with determining under what circumstances a late-filed tax return, filed after the IRS had conducted its own assessment, could be deemed a “return” within the meaning of section 523(a)(1)(B)(i). Read More
Posted by NCBRC - March 28th, 2013
No, we’re not talking about Spock and Dr. McCoy. We’re referring to the recent Fifth Circuit opinion in In re McCoy, 666 F.3d 924 (5th Cir. 2012), which held that a late-filed tax return is not a “return” for purposes of the Bankruptcy Code. The result is that a tax debt for which a late return was filed can never be discharged. This major departure from past practice is not warranted by either the plain language of the Code or the legislative history of BAPCPA, neither of which suggests that Congress intended to make tax debts related to late-filed returns non-dischargeable in all circumstances. Since McCoy was decided several bankruptcy courts have adopted a similar position.
NACBA member and tax expert Morgan King takes a closer look at this issue in his recent article “What’s Wrong with McCoy?” You can also follow the status of pending cases dealing with these issues at www.latefiledreturn.com.
NCBRC is interested in participating in cases dealing with this issue. To let us know about a pending case, please contact us at amicus.admin@nacba.org.
Whats Wrong with McCoy?