On June 9, 2014, the United States Bankruptcy Court, Northern District of Georgia, Atlanta Division, granted in part and denied in part, Defendant Internal Revenue Service motion for summary judgment in the adverserial proceeding portion of a Chapter 7 case involving the debtor and plaintiff, Kevin Jerome Briggs, Sr., and the defendant, United States of America (Internal Revenue Service) Case No. 13-56378.

The debtor (Kevin Briggs) filed suit against the defendant (“IRS”) seeking a determination that his personal income tax debts owed to the IRS for tax years 2002, 2007, 2010 and 2011 should be discharged in his underlying Chapter 7 bankruptcy case. The IRS sought a determination that the debtor’s income tax related debts for 2002, 2010 and 2011 are excepted from discharge pursuant to pursuant to 11 U.S.C. §§ 523(a)(1)(A), 507(a)(8) as taxes for which a return was due within the three years of the Debtor’s petition date, and 11 U.S.C. § 523(a)(1)(B)(i) as taxes for which a required return was not filed. Specifically, the parties disputed whether a tax return filed after the IRS had assessed the debt for the year 2002 qualified as a “return” as contemplated by 11 U.S.C. § 523(a)(1)(B)(i). The IRS conceded the debtor’s 2007 tax debt is dischargeable in bankruptcy.

The bankruptcy court held that the debts for 2010 and 2011, where the return was due within three years of the Debtor filing his bankruptcy petition, are excepted from discharge under 11 U.S.C.§§ 523(a)(1)(A), 507(a)(8). The court further held that a post-assessment late-filed return, such as that filed for 2002, may qualify as a “return” under 11 U.S.C. § 523(a)(1)(B)(i). The court therefore granted in part and denied in part the Defendant’s Motion for Summary Judgment.

The rationale for the court’s decision with respect to the 2010 and 2011 taxes is that under 26 U.S.C. § 6072(a), a taxpayer must file a tax return for a given taxable year on or before the fifteenth day of April of the following year, unless he obtains an extension of the time to file pursuant to 26 U.S.C. § 6081. The Debtor’s tax returns for 2010 and 2011 were due on April 15 of 2011 and 2012, respectively, but the Debtor obtained extensions until October 15th of each year. The Debtor filed his bankruptcy petition on March 23, 2013. Since the returns for these two years were due within the three year period prior to the date of the Debtor’s petition filing, the debt from these income tax return s is excepted from discharge by 11 U.S.C.§ 523(a)(1)(A). The IRS is thus entitled to summary judgment as to the dischargeability of these returns.

The rationale for the court’s decision with respect to the 2002 taxes turned on whether the 2002 post assessment late-filed return could be viewed as an honest and reasonable attempt to satisfy the tax laws. The court held the IRS did not present evidence probative of the fact that the 2002 filing was not an honest and reasonable attempt to convey accurately the required information. The court did not find persuasive the IRS argument that there was a timeliness requirement applicable to a determination of whether the 2002 late filed return qualified as a “return” under Section 523(a)(1)(B)(i). In reaching its decision, the court reviewed and weighed the impact of relevant federal case law prior to and following the 2005 enactment of the BAPCPA.

See In re KEVIN JEROME BRIGGS, SR., DEBTOR, Case No. 13-56378, Chapter 7; KEVIN JEROME BRIGGS, SR., Plaintiff v. UNITED STATES OF AMERICA (INTERNAL REVENUE SERVICE) Defendant, ADVERSARY PROCEEDING No. 13-05247-WLH.

Posted by Chuba Abaelu, Associate Editor, Wealth Strategies Journal