Mallo v. Internal Revenue Service (In Re Mallo)
774 F.3d 1313
| 10th Cir. | 2014Background
- Mallos and Martin filed late Form 1040s after the IRS assessed their tax liabilities for 2000 and 2001; the IRS issued deficiency notices and began collection before the tardy filings.
- Mallos' 2000 and 2001 tax debts were initially computed and later adjusted after the late Form 1040s, with some abatements.
- Martin filed late 2000 and 2001 returns after his assessments, resulting in some abatements but different discharge outcomes across cases.
- Bankruptcy courts discharged some debts generally, but the IRS sought to exclude certain taxes from discharge under § 523(a)(1)(B)(i) because no timely return was filed.
- The district court consolidated the Mallos and Martin matters, concluded postassessment 1040s were not returns under § 523(a)(1)(B)(i) due to lack of filing compliance, and affirmed the Mallos’ exclusions while reversing Martin’s discharge.
- The Tenth Circuit Court of Appeals affirmed, holding late-filed 1040s are not “returns” for discharge purposes because they fail applicable filing requirements under § 523(a)(*).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a postassessment untimely Form 1040 qualify as a return under § 523(a)(1)(B)(i)? | Taxpayers contend postassessment filings can meet Beard test. | IRS contends postassessment filings lack filing purpose and thus are not returns. | Late filings are not returns under § 523(a)(1)(B)(i) absent § 6020(a) assistance. |
| Do 'applicable filing requirements' include filing deadlines when defining 'return' under § 523(a)(*)? | Taxpayers argue timing is not an essential filing requirement. | IRS argues deadlines are applicable filing requirements. | Timeliness is an applicable filing requirement; late forms are not returns. |
| Does Beard test apply to determine if late returns are returns for discharge, given the hanging paragraph? | Late forms could satisfy the Beard test. | Beard test insufficient if filing deadlines are not met. | Even if Beard tested, timing defeats return status under § 523(a)(*). |
Key Cases Cited
- Beard v. Commissioner, 82 T.C. 766 (11th Cir. 1984) (four Beard elements; third element at issue here: honest and reasonable effort)
- McCoy v. Mississippi, 666 F.3d 924 (5th Cir. 2012) (plain meaning of § 523(a)(*) excludes late filings except § 6020(a) returns)
- Colsen v. United States, 446 F.3d 836 (8th Cir. 2006) (postassessment Form 1040 can be a return for discharge if facially informative)
- Payne v. United States, 431 F.3d 1055 (7th Cir. 2005) (majority view; postassessment returns generally not returns; dissent possible)
- Dewsnup v. Timm, 502 U.S. 410 (1992) (silence in legislative history not controlling when language is unambiguous)
- Badaracco v. Commissioner, 464 U.S. 386 (1984) (return defined by honesty and intent to satisfy tax law (pre-BAPCPA context))