In re Dennis Berkovich and Marina Voloshin

Case Type:
Consumer
Case Status:
Affirmed
Citation:
BAP No. CC-20-1025-FLS (9th Circuit, Oct 05,2020) Published
Tag(s):
Ruling:
A failure to report a change in a a taxpayer's federal income tax liability to the California Franchise Tax Board will render the state tax claim nondischargeable, because the required report is an "equivalent report" within the meaning of section 523(a)(1)(B),
Procedural context:
Appeal to the BAP from a summary judgment ruling in a nondischargeability proceeding that the debtors' state tax liability was nondischargeable pursuant to section 523(a)(1)(B).
Facts:
The debtors filed state tax returns as required for the 2003, 2004, and 2005 tax years. In 2008, the IRS assessed $145,000 in additional taxes for those years. Pursuant to section 18622(a) of the California Revenue and Taxation Code, the debtors were required to report the increased federal assessment to the FTB, but failed to do so. The debtors filed a chapter 13 plan classifying the FTB claim as general unsecured and providing for a 0.9% distribution to the class over 5 years. After the debtors completed all plan payments, the FTB filed a nondischargeability complaint, alleging that the state tax debt was nondischargeable under section 523(a)(1)(B)(i) because the debtors failed to report the increased federal tax assessment to the FTB. The bankruptcy court granted summary judgment in favor of the FTB The BAP affirmed, holding that the notice required by section 18622(a) is "a return, or equivalent report or notice" within the meaning of section 523(a)(1)(B). The BAP rejected the argument that anything not expressly a "return" is excluded from section 523(a)(1)(B), noting that the 2005 amendment to section 523(a)(1)(B) added the "equivalent report or notice" language, and the debtors' interpretation would render the added language superfluous.
Judge(s):
FARIS, LAFFERTY, and SPRAKER

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