Pendergast v. Massachusetts Department of Revenue (In re Pendergast)
494 B.R. 8
Bankr. D. Mass.2013Background
- Debtor filed late Massachusetts income tax returns for 2001–2005 and 2007; returns were overdue and 2002–2005 assessments occurred before/after filing.
- Debtor filed Chapter 7 on May 22, 2012; Schedule F listed $22,321.76 in Massachusetts taxes; undisputed outstanding tax was $30,131.15 as of Oct 12, 2012; discharge entered Aug 21, 2012.
- MDOR asserted counterclaims that taxes are nondischargeable under 11 U.S.C. § 523(a)(1)(B) and/or (C); MDOR moved for summary judgment on the 523(a)(1)(B) issue.
- Court granted MDOR’s motion for summary judgment, finding late Massachusetts returns do not qualify as “returns” under § 523(a)(1)(B)(ii) and thus the taxes are nondischargeable.
- There is a discussion of controlling statute and the hanging paragraph defining “return,” with a conclusion that Massachusetts late-filed returns are not “returns” for discharge purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether late Massachusetts returns are “returns” under § 523(a)(1)(B) | Pendergast—late-filed Massachusetts returns can constitute returns under the hanging paragraph | MDOR—late-filed returns do not satisfy applicable filing requirements and are not returns | Yes; late-filed Massachusetts returns are not returns under § 523(a)(1)(B)(i/ii) |
| Effect of Massachusetts filing requirements on the hanging paragraph | Brown/Gonzalez interpretation should apply; returns serve as assessment | Filing requirements must be read as limiting the meaning of “return” | Massachusetts filing deadlines are “applicable filing requirements” that bar late returns from being “returns” |
| Scope of 6020(a) vs 6020(b) in defining returns | 6020(a) returns are still valid as returns | The carve-out for 6020(a) returns is narrow and does not rescue all late returns | Carve-out clarified; 6020(a) returns may qualify, but exactly which mass returns qualify remains limited |
| Overall nondischargeability outcome for the Periods at Issue | Debtor argues returns exist and taxes may be dischargeable | MDOR prevails if no returns filed timely | Taxes nondischargeable; no valid returns under § 523(a)(1)(B) for the periods |
Key Cases Cited
- Brown v. Massachusetts Dep’t of Revenue (In re Brown)/Gonzalez v. Massachusetts Dep’t of Revenue (In re Gonzalez), 489 B.R. 1 (Bankr. D. Mass. 2013) (late file are not returns for discharge purposes per Mass. law)
- In re McCoy, 666 F.3d 924 (5th Cir. 2012) (distinguishes 6020(a) vs 6020(b) returns; supports narrow 6020(a) carve-out)
- In re Payne, 431 F.3d 1055 (7th Cir. 2005) (post-assessment returns; discussed test flexibility under § 523(a)(1)(B))