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- Title
If It Looks Like a Duck, Swims Like a Duck, and Quacks Like a Duck, It Is Probably a Duck! - Whether Late-filed Tax Returns Constitute "R e tu rn s" for Purposes of Discharge under § 523.
- Authors
Sutton, Kristi R.; Uluc, Inan
- Abstract
When Congress amended the Bankruptcy Code in 2005, courts grappled with the irreconcilable language of the newly-added hanging paragraph in § 523(a). When faced with the question of whether a chapter 7 debtor may discharge liability arising from a late-filed tax return, courts diverge into four distinct groups. Some courts follow a strict " one* day date rule" under which the return loses its purpose and no longer qualifies as a "return" for discharge purposes i f the debtor fails to file timely. Courts at the opposite end of the spectrum wholly refuse to entertain timeliness as a legitimate factor when ruling on what qualifies as a return for purposes of discharge. This article argues that the best approach lool{s solely to the tax return itself to find whether the debtor acted ''honestly and reasonably," which allows courts to avoid the draconian one-day-late rule, disregard the Internal Revenue Service assessment, and avoid a judicially inefficient totality-of-the-circumstances test. Further, given the lack of discernable congressional intent concerning how to apply the hanging paragraph, the test proposed here is the most faithful to sound bankruptcy policy because it neither justifies superfluous language nor creates an internal inconsistency within § 523.
- Subjects
UNITED States; TAX returns; BANKRUPTCY discharge of debt; DISCHARGE of debt; DEBTOR &; creditor; BANKRUPTCY; GOVERNMENT policy
- Publication
American Bankruptcy Law Journal, 2019, Vol 93, Issue 1, p111
- ISSN
0027-9048
- Publication type
Article