Court Rejects McCoy and
Sticks with Beard
W
hether 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.
Relying on United States v. Hindenlang
(In re Hindenlang), 164 F.3d 1029 (6th
Cir. 1999), the bankruptcy court found
that the Biggers’ tax liability was not
dischargeable (with the exception of
the overage) because their returns
showing reduced liability did not
serve any purpose and, therefore,
did not constitute “returns” within the
meaning of section 523(a)(*). The
court granted summary judgment in
favor of the IRS. In re Biggers, 528
B.R. 870 (Bankr. M.D. Tenn. 2015).
Section 523(a)(1)(B)(i) excludes from
discharge any debt “with respect to
which a return, or equivalent report or
notice, if required … was not filed or
given.” Under the hanging paragraph
of section 523(a), added to the Code
in the BAPCPA amendments of 2005,
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a return “must satisfy the requirements
of applicable nonbankruptcy law
and be filed in accordance with
applicable
filing
requirements.”
On appeal, the district court addressed
the split in the circuits as to the effect
of the BAPCPA definition of “return” on
pre-BAPCPA analysis. The court noted
that the First, Fifth and Tenth circuits
have adopted the hard line that no latefiled return constitutes a “return,” based
on the reasoning set forth in McCoy