947 F.3d 770
11th Cir.2020Background
- John Shek filed his 2008 Massachusetts income tax return in November 2009 (seven months late), owing $11,489 that remained unpaid.
- Six years later Shek filed Chapter 7 bankruptcy and received a discharge in January 2016; Massachusetts DOR then sought to collect the tax debt.
- Shek moved to reopen his bankruptcy to determine whether the discharge wiped out the late-filed state tax liability; bankruptcy and district courts held the tax debt dischargeable.
- Central legal question: whether a late-filed state tax return qualifies as a "return" under the § 523(a) hanging paragraph (11 U.S.C. § 523(a)(*)) so the tax debt is dischargeable.
- DOR advanced two main arguments: (1) the phrase "applicable filing requirements" includes filing deadlines (the “one-day-late” rule), so any late return is not a "return"; and (2) Massachusetts law defines a "return" as timely ("duly filed").
- The Eleventh Circuit rejected both arguments, found the hanging paragraph does not categorically exclude late-filed returns, concluded Massachusetts law does not treat untimely filings as non-returns, noted the Beard test (if applied) was conceded satisfied, and affirmed discharge of Shek’s tax debt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "applicable filing requirements" in the § 523(a) hanging paragraph makes any late filing non‑qualifying as a "return" (the one‑day‑late rule) | Shek: phrase does not impose a categorical timeliness requirement; "applicable" limits requirements to those relevant to defining a return | DOR: timely filing is an "applicable filing requirement," so any late return is not a "return" under § 523(a) | Court rejected DOR’s one‑day‑late rule; "applicable" is read in context and does not render § 523(a)(1)(B)(ii) surplusage |
| Whether "applicable nonbankruptcy law" incorporates Massachusetts’ "duly filed" requirement to define a return as timely only | Shek: Massachusetts law treats late filings as returns and separately penalizes lateness; "duly filed" need not mean timely | DOR: Massachusetts regulation's "duly filed" language imports timeliness into the state definition of "return" | Court held Massachusetts law does not define "return" solely by timeliness; DOR’s argument fails |
| Whether to apply the Beard test or state law to determine what constitutes a "return" for § 523(a) | Shek: (and bankruptcy court) Beard test satisfied; in any event Massachusetts law yields same result | DOR: urged that state filing requirements should control | Court did not decide which rule governs here because both lead to the same outcome; parties stipulated Beard prongs were met |
| Whether Shek’s Massachusetts tax debt was discharged | Shek: discharge encompassed the late‑filed tax debt | DOR: sought to collect, arguing the debt was nondischargeable because return was late | Court affirmed that the bankruptcy discharge included Shek’s tax debt |
Key Cases Cited
- Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007) (Bankruptcy Code enacted to give honest debtors a fresh start)
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) (exceptions to discharge construed narrowly)
- Zellerbach Paper Co. v. Helvering, 293 U.S. 172 (1934) (document can be a return if it purports to be one, is sworn, and shows honest attempt to satisfy law)
- In re Justice, 817 F.3d 738 (11th Cir. 2016) (Beard test framework; relevant Eleventh Circuit precedent)
- In re Fahey, 779 F.3d 1 (1st Cir. 2015) (held hanging paragraph excludes late returns; disagreed with here)
- In re Mallo, 774 F.3d 1313 (10th Cir. 2014) (held plain meaning excludes late‑filed returns)
- In re McCoy, 666 F.3d 924 (5th Cir. 2012) (held late state returns are not "returns" absent § 6020(a)‑type safe harbor)
- Beard v. Commissioner, 82 T.C. 766 (1984) (Tax Court test defining when a document qualifies as a return)
- TRW Inc. v. Andrews, 534 U.S. 19 (2001) (surplusage canon; avoid interpretations that render provisions insignificant)
- Roberts v. Sea‑Land Servs., Inc., 566 U.S. 93 (2012) (reject construing statutes to render provisions superfluous)
- Hamilton v. Lanning, 560 U.S. 505 (2010) (post‑BAPCPA interpretation should harmonize with pre‑BAPCPA practice)