IN RE: JOHN SALVADOR V. USA
- Summarized by Michael Myers , Ballard Spahr LLP
- 1 year 12 months ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 23-60008 (9th Circuit, Mar 01,2024) Not Published
- Tag(s):
-
- Ruling:
- The Ninth Circuit Court of Appeals upheld the Bankruptcy Appellate Panel and bankruptcy court's summary judgment in favor of the government in a chapter 7 debtor's adversary proceeding to determine dischargeability of tax debt where debtor had not filed tax returns prior to the IRS assessing tax liability.
- Procedural context:
- The chapter 7 debtor filed an adversary proceeding to determine the dischargeability of tax debt under Section 523(a)(1). The bankruptcy court granted summary judgment in favor of the government and the Bankruptcy Appellate Panel affirmed.
- Facts:
- Debtor had not filed tax returns for the years for which he was seeking to discharge tax liability prior to the IRS assessing tax liability. Section 523(a)(1)(B)(i) of the Bankruptcy Code provides that tax debts are only dischargeable if, among other things, the debtor has filed a return. Under the Ninth Circuit test (the "Beard Test"), there are four elements in determining what qualifies as a "return": “First, there must be sufficient data to calculate tax liability; second, the document must purport to be a return; third, there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and fourth, the taxpayer must execute the return under penalties of perjury.” In re Hatton, 220 F.3d 1057, 1060–61 (9th Cir. 2000) (quoting Beard v. Comm’r of Internal Revenue, 82 T.C. 766 (1984), aff’d, 793 F.2d 139 (6th Cir. 1986) (per curiam)). Under Ninth Circuit interpretation, a debtor must have filed prior to assessment of liability by the taxing authority in order for the filing to be considered a "return" because a late filing is not considered to be a "honest and reasonable attempt" to satisfy the requirements of the tax law.
- Judge(s):
- W. FLETCHER, NGUYEN, and LEE
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