Timothy Miller v. Jason Wylie
- Case Type:
- Consumer
- Case Status:
- Reversed and Remanded
- Citation:
- No. 24-1321 (6th Circuit, Oct 23,2024) Published
- Tag(s):
-
- Ruling:
- While a Chapter 7 trustee or creditor seeking to deny a debtor a discharge under 11 U.S.C. § 727(a)(2)(B) must adduce evidence that the debtor acted with the specific intent to frustrate the trustee's efforts to collect assets to satisfy creditors' claims, the debtors' testimony that their election to apply income tax overpayments to future tax obligations is not evidence that the debtor did so with the purpose of hindering, delaying, or defrauding the Chapter 7 trustee.
- Procedural context:
- The bankruptcy court ruled that the Chapter 7 debtors' income tax election to apply overpayments to future income tax obligations was a fraudulent transfer under 11 U.S.C. § 727(a)(2)(B). The debtors appealed. The district court reversed and held that the debtors were entitled to a Chapter 7 discharge. The Chapter 7 trustee appealed.
- Facts:
- In 2018, Jason Wylie's health problems forced him to stop working. While considering bankruptcy, Jason and his wife, Leah, delayed filing their 2018 and 2019 tax returns. The Wylies' accountant prepared their 2018 state and federal income tax returns by March 2020. The returns showed a significant overpayment, which could be refunded to the Wylies or applied to future tax obligations. The Wylies elected to apply the overpayments to future income tax obligations.
The Wylies' accountant then prepared their 2019 income tax returns, which also showed that the Wylies had withheld more than they owed. The Wylies again elected to apply the overpayments to future income tax obligations.
The day after meeting with their accountant, the Wylies filed a Chapter 7 petition. The accountant then filed the Wylies' 2019 income tax returns.
The Chapter 7 trustee filed an adversary proceeding to deny the Wylies a discharge under 11 U.S.C. § 727 because the Wylies elected to apply their income tax overpayments to future obligations.
At trial, the bankruptcy court found that the Wylies should be denied a discharge under section 727 because the Wylies' income tax elections were transfers of property made with the intent to hinder, delay, or defraud the trustee.
- Judge(s):
- SILER, GRIFFIN, and MATHIS, Circuit Judges
ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!
