Smith v. U.S. IRS

Summarized by Thomas Phinney , Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP
9 years 7 months ago

Citation:

No. 14-15857 (9th Cir. July 13, 2016) (published)

Tag(s):

Ruling:

Summary judgment was properly entered determining that debtor’s tax liabilities were nondischargeable under § 523(a)(1)(B)(i) relating to tax debt for unfiled returns. The panel held that the debtor’s late-filed Form 1040 did not represent an honest and reasonable attempt to satisfy the requirements of the tax law, and he therefore did not file a “return” within the meaning of § 523(a)(1)(B)(i).

Procedural context:

The debtor sought summary judgment discharging certain tax debt, which the bankruptcy court granted. The district court reversed, granting summary judgment in favor of the IRS that the tax debt was nondischargeable. The debtor appealed the district court’s ruling, and the Ninth Circuit affirmed the district court ruling.

Facts:

The Debtor filed a Form 1040 for the year 2001 on which he wrote “original return to replace SFR.” But this tax filing, was made seven years late and three years after the IRS assessed a deficiency against him. The Ninth Circuit ruled that the issue was governed by the test from In re Hatton, 220 F.3d 1057, 1059 (9th Cir. 2000), which had adoped the Tax Court’s widely-accepted definition of “return:” “In order for a document to qualify as a [tax] return: (1) it must purport to be a return; (2) it must be executed under penalty of perjury; (3) it must contain sufficient data to allow calculation of tax; and (4) it must represent an honest and reasonable attempt to satisfy the requirements of the tax law.” The panel held that the 2005 amendment in BAPCPA which added a definition of a tax return, did not change the analysis. The panel held that the debtor’s late-filed Form 1040 did not represent an honest and reasonable attempt to satisfy the requirements of the tax law, and he therefore did not file a “return” within the meaning of § 523(a)(1)(B)(i).

Judge(s):

Jerome Farris, Diarmuid F. O’Scannlain, and Morgan Christen, Circuit Judges

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