Casano v. Internal Revenue Service (In re Casano)
473 B.R. 504
Bankr. E.D.N.Y.2012Background
- Debtor filed chapter 7 on 2011-12-29; case is no-asset; deadline to object to discharge 2012-04-03.
- IRS assessed 2001 tax on 2004-10-25 and 2002 tax on 2005-09-12 after failure to file timely returns; deficiency notices issued.
- IRS issued levies and later abated 2001 liability by $48,882 and 2002 by $35,462 after debtor filed Forms in 2006.
- Debtor commenced adversary on 2012-02-07 seeking discharge of IRS liabilities for 2001, 2002, (and 2010) based on timely filing and timing; penalties for 2001-2002 argued to be dischargeable.
- IRS argues that 2001-2002 liabilities were assessed before debtor filed returns, and that post-assessment returns do not constitute dischargeable returns; cross-motion sought to except these taxes from discharge under 11 U.S.C. § 523(a)(1)(B).
- Court analyzes whether a late Form 1040 filed after assessment can be a dischargeable return under § 523(a)(1)(B) in light of BAPCPA’s definition of “return.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether late-filed 2001-2002 Form 1040s qualify as returns under § 523(a)(1)(B). | Plaintiff urges post-assessment Form 1040 can be a return under Beard factors. | Defendant contends post-assessment Form 1040 is not a return under § 523(a)(1)(B). | No; post-assessment Form 1040s do not constitute returns under § 523(a)(1)(B). |
| Effect of assessment occurring before filing on dischargeability of taxes. | Plaintiff seeks discharge if returns were filed timely or after enough time to avoid assessment. | Defendant contends assessment fixes nondischargeability when based on deficiency, regardless of late filing. | Taxes for 2001-2002 nondischargeable; penalties for 2001-2002 dischargeable. |
| Impact of BAPCPA’s return definition on dischargeability analysis. | BAPCPA clarifies what constitutes a return, favoring discharge when appropriate. | Even with BAPCPA, late filings post-assessment generally not considered returns. | Court applies clear reading of § 523(a)(1)(B) with BAPCPA definition; late filed returns not returns. |
Key Cases Cited
- In re Colsen, 446 F.3d 836 (8th Cir. 2006) (post‑assessment Form 1040 can qualify as a return under Beard analysis (court-based discussion))
- In re Payne, 431 F.3d 1055 (7th Cir. 2005) (post‑assessment Form 1040 generally not a return; abatement does not render dischargeable)
- In re Moroney, 352 F.3d 902 (4th Cir. 2003) (post‑assessment Form 1040 not a return; nondischargeable tax debt)
- In re Hindenlang, 164 F.3d 1029 (6th Cir. 1999) (Beard factors; late filings not treated as returns for dischargeability)
- In re McCoy, 666 F.3d 924 (5th Cir. 2012) (state tax context; filing deadline impacts dischargeability)