Perry v. United States
500 B.R. 796
M.D. Ala.2013Background
- Debtor Daryl Zain Perry filed a Chapter 7 case and an adversary to determine dischargeability of federal income taxes for 1997, 1999, 2001, and 2003.
- IRS asserted these four tax debts were nondischargeable under § 523(a)(1)(B)(i) because returns were not filed or given.
- Perry filed late 1040s after the IRS issued deficiency assessments via substitute returns and after liens were placed.
- IRS assessed liabilities on substitute returns for 1997, 1999, 2001, and 2003; Perry later filed Form 1040s belatedly (late by several years).
- Bankruptcy court granted IRS summary judgment, ruling the four taxes were nondischargeable; Perry appealed.
- Record included undisputed dates of assessments, notices, liens, and Perry’s late filings, leading to the appellate review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether late-filed returns can qualify as returns under § 523(a)(1)(B)(i) post-BAPCPA | Perry argues McCoy is wrong; late returns may satisfy ‘return’ under Beard or pre-BAPCPA law | IRS argues late returns never qualify as returns under the hanging paragraph, unless within § 6020(a) safe harbor | Affirmed: late returns do not qualify as returns under § 523(a)(1)(B)(i) per McCoy/Beard |
| Role of McCoy v. Mississippi State Tax Comm’n in post-BAPCPA dischargeability | McCoy should not control; argues broader interpretation | McCoy applies; late returns not returns absent safe harbor | Affirmed: McCoy controls, late returns not returns for discharge purposes |
| Effect of the IRS assessments vs. post-assessment returns under Smythe | Assessments are not controlling; post-assessment returns could be returns | Assessments create debts; post-assessment returns irrelevant under Smythe | Affirmed: Smythe supports treatment of post-assessment returns as not dispositive; assessments drive nondischargeability |
| Beard four-prong test applicability to post-BAPCPA cases | Beard remains applicable; late returns can satisfy fourth prong | Beard yields no honest and reasonable effort given delays after assessments | Affirmed: Beard test not satisfied; late returns not dischargeable under § 523(a)(1)(B)(i) |
Key Cases Cited
- McCoy v. Miss. State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012) (definition of 'return' and safe harbor under 6020(a))
- In re Hindenlang, 164 F.3d 1029 (6th Cir. 1999) (post-assessment returns not returns for discharge purposes under Beard)
- In re Moroney, 352 F.3d 902 (4th Cir. 2003) (late filings not honest and reasonable attempts; supports Moroney rule)
- In re Payne, 431 F.3d 1055 (7th Cir. 2005) (late filings after assessment; reasonable endeavor analysis)
- In re Colsen, 446 F.3d 836 (8th Cir. 2006) (Beard-like analysis in dischargeability context)