Consumer Bankruptcy Journal Spring 2017 - Page 16

NAVIGATING THE LATE TAX RETURN PROBLEM

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Section 13-409 [ of Maryland laws ) is not the equivalent of a return . Section 13-409 does not require any statement under penalty of perjury and could be satisfied by the filing an unsigned letter .”)
6 1 st Circuit , New Hampshire , Massachusetts , Maine , Rhode Island , Puerto Rico ; 5 th Circuit , Texas , Mississippi , Louisiana ; 10 th Circuit , Utah , Wyoming , Colorado , New Mexico , Kansas , Oklahoma .
7 Fahey v . Mass . Dept . Rev . 779 F . 3d 1 ( 1st . Cir . 2015 ); In re McCoy 666 F . 3d 924 ( 5th Cir . 2012 ); Mallo v . IRS 774 F3d 1313 ( 10th Cir . 2014 ). 8 A good summary of the current status of this argument may be found in Biggers v . Internal Revenue Serv . ( In re Biggers ), 528 B . R . 870 ( Bankr . M . D . Tenn ., 2015 ).
9 Whether a substitute for return (“ SFR ”) was filed is usually irrelevant … the SFR is not , without more , an assessment of the tax . The phrase often heard is “ an SFR assessment .” This is a misnomer ; the SFR , per se , is blank and does not contain an assessment . The assessment , if any , comes later . 10 See , e . g ., Coyle v . United States ( In re Coyle ), 524 B . R . 863 , 867 ( Bankr . S . D . Fla ., 2015 ) (“ The IRS ’ s official position is that a late filed tax return can be discharged if it complies with § 523 ( a )( 1 )( B )( ii ) and if the filing takes place before an IRS Assessment .”); Wogoman v . IRS 475 B . R . 239 ( B . A . P . 10 th Cir . 2012 ); IRS Chief Counsel Notice CC – 2010 – 016 ( link to that notice is found at LateFiledReturn . com ).
11 Beard v . Commissioner , 82 T . C . 766 , 777-78 ( 1984 ), aff ’ d , 793 F . 2d 139 ( 6th Cir . 1986 ). This rule prescribes 4 “ prongs ” that must be satisfied , including “… there must be an honest and reasonable attempt to satisfy the requirements of the tax law .”
12 See , e . g ., Maitland v . N . J . Div . of Taxation ( In re Maitland ) ( Bankr . N . J ., 2015 ), In re Colsen , 446 F . 3d 836 ( 8th Cir ., 2006 ); In re Davis ( Bankr . N . J ., 2015 ).
13 See , e . g ., Cases based on the Beard test have often held that the late return was not filed in good faith and accordingly were invalid : Selbst v . U . S . Dep ’ t of Treasury ( In re Selbst ), 544 B . R . 289 , 2016 USTC P 50 ( Bankr . E . D . N . Y ., 2016 ), Casano v . Internal Revenue Serv . ( In re Casano ) ( Bankr . E . D . N . Y ., 2012 ), In re Izzo , 287 B . R . 158 ( Bankr . E . D . Mich ., 2002 ), Moffitt v . United States ( In re Moffitt ) ( Bankr . W . D . Ky ., 2013 ).
14 The 2-year period commences on the date the taxpayer files his or her tax return . 15 11 U . S . C . § 523 ( a )( 19 ). 16 Putnam v . I . R . S . __ B . R .__ ( E . D . N . Y . 2014 ); Ollie-Barnes v . Internal Revenue Serv . ( In re Ollie- Barnes ) ( Bankr . M . D . N . C ., 2014 ) (… the two year look-back period in § 523 ( a )( 1 )( B )( ii ) is similarly subject to equitable tolling under either Sections 105 ( a ) or 108 ( c ) because it is an indistinguishable limitations period from the period in Sections 523 ( a )( 1 ) ( A ) and 507 ( a )( 8 )( A )( i ).”) The author has found only 4 cases that address the issue , in New York , North Carolina , California , and Georgia .
17 11 U . S . C . § 523 ( a )( 1 )( C ). 18 You can find a consultation link at LateFiledReturn . com or DischargeTaxes . com .
16 CONSUMER BANKRUPTCY JOURNAL Spring 2017 National Association of Consumer Bankruptcy Attorneys