MEMORANDUM DECISION AND ORDER
Before the Court is the Plaintiffs motion for summary judgment seeking a determination that federal income taxes due and owing to the Defendant, United States of America, for tax years ending December 31 of 2001 and 2002 are dischargeable pursuant to 11 U.S.C. § 523(a)(1)(B) (the “Motion”) and the Defendant’s cross motion for summary judgment claiming that these taxes are excepted from discharge pursuant to 11 U.S.C. § 523(a)(1)(B) (“Cross-Motion”). The Court has jurisdiction pursuant to 28 U.S.C. § 1334(a) and (b). This contested matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (I), and (O) and 11 U.S.C. § 523. The following constitutes the Court’s finding of fact and conclusions of law as mandated by Bankruptcy Rule 7052.
FACTS
Plaintiff filed for chapter 7 bankruptcy relief on December 29, 2011 (the “Petition Date”). This is a no asset case and the
Plaintiff asserted that due to business problems, Plaintiff failed to timely file his federal income tax returns or IRS Forms 1040 (the “Forms”) for the 2001 and 2002 tax years. When no tax return was timely filed for those tax years, the United States Internal Revenue Service (“IRS”) conducted an examination and issued statutory Notices of Deficiency. This is the routine practice and procedure performed whenever taxpayers fail to file tax returns. The IRS then assessed tax liabilities for the 2001 tax year on October 25, 2004 and for the 2002 tax year on September 12, 2005 based on the unchallenged Notices of Deficiency. When Plaintiff failed to pay the assessments, the IRS sent the Plaintiff Notices of Intent to Levy in July of 2006. Plaintiff subsequently filed his Forms for the 2001 and 2002 tax years in August of 2006. Upon review of the Plaintiffs Forms, the IRS abated the Plaintiffs federal income tax liability (1) for the 2001 tax year by $48,882 and (2) for the 2002 tax year by $35,462.
Shortly after filing his petition for chapter 7 relief, Plaintiff commenced this adversary proceeding on February 7, 2012 seeking a determination that his income tax obligations to the United States and New York State Department of Taxation and Finance for the tax years ending December 31, of 2001, 2002 and 2010 should be discharged entirely on the basis that the tax returns for those years were timely filed or filed more than two years ago; that more than 3 years have expired since the filing of the relevant tax returns; and that the Plaintiff has not been assessed within 240 days prior to the Petition Date.
Defendant filed an Answer on February 8, 2012 denying that the income tax obligations at issue are dischargeable because the debt for the 2001 and 2002 tax years were assessed prior to the Plaintiffs filing of the Forms for those years and as such the assessments are debts for which a return was not filed within the meaning of 11 U.S.C. § 523(a)(1)(B)®. In addition, Defendant argued that the federal income tax liability for the 2010 tax year is a priority tax liability under 11 U.S.C. § 507(a)(8)(A)® which is nondischargeable pursuant to 11 U.S.C. § 523(a)(1)(A). The Plaintiffs federal income tax return for the 2010 year was filed on or about April 15, 2011, which is within 3 years of the Petition Date and the Plaintiff was assessed within 240 days of the Petition Date. Defendant does admit that the penalties for the 2001 and 2002 tax years are discharge-able.
Plaintiff then filed this Motion seeking a determination that the federal income taxes that may be owed to the United States for the 2001 and 2002 tax years fell within the exception to discharge under 11 U.S.C. § 523(a)(1)(B) because the federal income tax returns were filed more than two years before the Petition Date.
Defendant, IRS, then filed its Cross-Motion objecting to the Plaintiffs Motion and seeks a determination that the income taxes assessed on October 25, 2004, and on September 12, 2005, for the 2001 and 2002 taxable years, respectively, plus interest, are excepted from discharge pursuant to 11 U.S.C. § 523(a)(1)(B). Defendant argues that the Plaintiffs tax liability for those years were based on defaulted deficiency assessments made by the IRS, and therefore, the liabilities are not based on the Plaintiffs late filed tax Form. It was the IRS’s deficiency assessments which established the basis for its right to collect these taxes. As soon as the IRS assessed the unpaid taxes, the tax liabilities were determined and the exception to discharge became fixed because the Plaintiff had not yet filed any tax returns at the time of the
DISCUSSION
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure as made applicable by Bankruptcy Rule 7056, the Court may award summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
Summary judgment is appropriate ... when, ‘after drawing all reasonable inferences in favor of a non-movant, no reasonable trier of fact could find in favor of that party.’ Where the plaintiffs claim must be established by clear and convincing evidence, ‘the issue is whether, with all conflicts in the evidence resolved and all reasonable inferences drawn in favor of the nonmoving party, the record contains sufficient evidence from which a reasonable jury could find for the nonmoving party under the clear and convincing standard.’
In re Allou Distributors, Inc.,
The parties agree that there are no genuine triable issues of fact in dispute. Accordingly, summary judgment is appropriate in this instance.
At issue is whether a Form 1040 filed after the IRS has made an assessment against the debtor constitutes a tax return filed within the meaning of 11 U.S.C. § 523(a)(1)(B). The Court finds that the filing of a Form 1040 post-assessment does not constitute a tax return within the meaning of § 523(a)(1)(B).
Pursuant to 11 U.S.C. § 523(a)(1)(B), “an individual debtor cannot discharge any debt for a tax or customs duty ... with respect to which a return, or equivalent report or notice, if required ... was not filed or given.” 11 U.S.C. § 523(a)(l)(B)(i).
Prior to enactment of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8 § 714 (April 20, 2005), the Bankruptcy Code did not contain a definition of what constituted a “return” for purposes of section 523(a). Courts had adopted and applied a four part test set forth in Beard v. Commissioner,
A majority of the courts of appeal that have considered the issue of whether a Form 1040 filed by a debtor post-assessment by the IRS constitutes a “return” have held that a Form 1040 did not consti
The Plaintiff in this case argues that this Court should follow the Eighth Circuit which held that in determining whether a post-assessment Form 1040 evinces an honest and genuine attempt to satisfy the tax laws under the Beard test, the court should look only to the face of the document and not the intent or reasons behind the taxpayer’s delinquency in timely filing such Form 1040. In re Colsen,
However, Plaintiff fails to note that as a result of the amendment to section 523(a) by BAPCPA in 2005 to include the definition of a “return”, the Court no longer needs to determine whether a post-assessment Form 1040 satisfies the factors under the Beard test in order to be deemed a “return” for section 523(a) purposes. Section 523(a), as amended, includes the following unnumbered paragraph:
[f]or purposes of this subsection, the term “return” means a return that satisfies the requirements of applicable non-bankruptcy law (including applicable filing requirements). Such term includes a return prepared pursuant to section 6020(a) of the Internal Revenue Code of 1986, or similar State or local law, or a written stipulation to a judgment or a final order entered by a non-bankruptcy tribunal, but does not include a return made pursuant to section 6020(b) of the Internal Revenue Code of 1986, or a similar State or local law.
11 U.S.C. § 523(a)(emphasis added).
Bankruptcy courts dealing with the same issue in cases filed after the enactment of BAPCPA have held that according to the plain reading of the Bankruptcy Code, a late filed Form 1040 would never qualify as a return for purposes of section
The IRS also argues that the Court need not follow the other courts’ harsh reading of the “applicable filing requirements” language in Section 523(a) to mean that tax debts are always nondischargeable whenever a Form 1040 is filed late. Rather, the IRS acknowledges that nondis-chargeability of a tax debt should be based upon whether the IRS had to make an assessment of tax liability based upon a deficiency notice. Therefore, if a debtor files his Form 1040 in time to enable the IRS to assess the appropriate tax without having the IRS make an assessment based upon a deficiency notice, then under non-bankruptcy law, the tax debt to the United States would be dischargeable under Section 523(a)(l)(B)(i) even if the tax return upon which the assessment is based was filed late.
In this case, the Court need not address the issue of whether any late filed Form 1040 would always result in the tax debt for the relevant year being nondischargeable. Here, the Plaintiff clearly failed to file the Forms for the 2001 and 2002 tax years by the applicable filing deadlines and those Forms wdre filed after the IRS made its assessment with respect to the Plaintiffs tax liability for those years. Smythe v. United States (In re Smythe), Adv. No. 11-04077, 2012 Bankr.LEXIS 1057,
CONCLUSION
Based upon the foregoing, the Plaintiffs tax liabilities to the IRS for the 2001 and 2002 tax years are nondischargeable pursuant to 11 U.S.C. § 523(a)(1)(B). However, as conceded by the IRS, the tax penalties owed to the IRS for the 2001 and 2002 tax years are dischargeable.
So Ordered.