MEMORANDUM DECISION REGARDING MOTION FOR SUMMARY JUDGMENT
Before the court is a motion for summary judgment (the “Motion”) brought by the defendant in this adversary proceeding, the Internal Revenue Service (the “IRS”). This Motion is opposed by the debtors and plaintiffs, Kevin and Susan Martin (the “Martins”), who have asked the court to rule in their favor based on the same set of undisputed facts. The Martins seek a determination that their debt to the IRS, arising from personal income taxes owed for the years 2004, 2005, and 2006, has been discharged in this chapter 7 case. The IRS argues that the taxes are excepted from the discharge by application of 11 U.S.C. § 523(a)(1)(B)®
The bankruptcy court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1384, 11 U.S.C. § 523, and General Orders No. 182 and 330 of the U.S. District Court for the Eastern District of California. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I).
BACKGROUND AND UNDISPUTED FACTS.
There are no triable issues of material fact in this adversary proceeding, and the parties have not disputed the admissibility of the proffered documents. Accordingly, the court has considered all of the docu-
The Late-Filed Tax Returns. The Martins did not file their federal income tax returns for the 2004, 2005, and 2006 tax years when those returns became due. As a result, the IRS initiated an audit examination on June 16, 2008, to determine the Martins’ tax liability for those three tax years. On August 19, 2008, the IRS mailed to the Martins a notice of deficiency for each of the three years.
Instead, beginning on August 28, 2008, a few days after receiving the 90-day letter, the Martins sought the services of an accountant named Andrea Shallcross to prepare their tax returns. Ms. Shallcross completed and signed the Martins’ Form 1040 tax returns for each of the three tax years on December 18, 2008. However, for reasons unclear to the court, the Martins did not sign and file the Form 1040s until several months later.
On March 16, 2009, having not received anything from the Martins, the IRS made assessments of the Martins’ tax liability for the years 2004, 2005, and 2006, in the amounts of $18,432, $9,928, and $32,133, respectively, along with interest and penalties.
Shortly thereafter, on June 2, 2009, the Martins signed and mailed to the IRS their previously completed Form 1040s for the three tax years at issue. These returns stated the Martinis’ tax liability to be $17,358 for the year 2004, a $1,074 decrease from the IRS’s assessment; $14,852 for the year 2005, a $4,924 increase from the assessment; and $27,010 for the year 2006, a $5,123 decrease from the assessment. The IRS accepted the Martins’ three Form 1040s and adjusted its assessments to match the amounts stated therein.
The Bankruptcy and the Adversary Proceediny. Although the Martins finally filed their missing Form 1040s, they have yet to pay any of the taxes. In November 2011, the Martins filed a voluntary petition under chapter 7. Based on their schedules, the Martins own a modest home in Bishop, California, valued at $210,000 with two mortgages totaling $131,500. They also own personal property worth a total of $9,950, which includes two old automobiles, one of which was subject to a secured
The Martins’ schedule E listed two priority creditors, the California Franchise Tax Board with a claim scheduled in the amount of $12,600 and the IRS with a claim scheduled in the amount of $102,000. Schedule F listed unsecured claims in the amount of $31,262. The Martins received their chapter 7 discharge on February 27, 2012. No proofs of claim were filed, and the case was closed as a “no-asset” case on March 2, 2012.
The Martins commenced this adversary proceeding, without the assistance of an attorney, on July 30, 2012. They filed and served on the IRS a document entitled “Adversary Complaint,” which stated simply, “We cannot afford to pay off our IRS tax debts for the years 2004, 2005 and 2006.”
After the Martins filed an “amended” complaint,
SUMMARY JUDGMENT STANDARD.
Summary judgment in favor of the moving party is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), incorporated by Fed. R. Bankr.P. 7056. “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S.
The parties may use summary judgment to dispose of all or part of the asserted claims for relief. See Fed.R.Civ.P. 56(a). Additionally, the court may sua sponte grant summary judgment in favor of the nonmoving party, as long as “the moving party against whom summary judgment [is] rendered had a full and fair opportunity to ventilate the issues involved in the motion.” Cool Fuel, Inc. v. Connett,
As noted above, there are no disputed issues of material fact. All of the facts necessary to decide this case have been fully and fairly presented by the IRS in its Motion and supporting papers. Based on the number of reported decisions dealing with this § 523(a)(l)(B)(i) issue on virtually identical facts and the fact that they have been cited in the IRS’s papers, it is clear that the IRS is very familiar with all of the arguments on the issue and that it has had a full and fair opportunity to brief those arguments in this case. Therefore, this adversary proceeding appears to be ripe for resolution by summary judgment.
ISSUE PRESENTED.
It is undisputed that in June 2009, the Martins filed three Form 1040s for the 2004, 2005, and 2006 tax years. Those documents were filed approximately three months after the IRS assessed the Martins’ tax liability for the subject tax years and more than two years before the commencement of the Martins’ bankruptcy case.
The IRS contends that the Martins’ tax debt is excepted from their discharge under § 523(a)(1)(B)® because the Martins did not file their tax returns until after the IRS made its assessments and began its collection efforts. It offers two theories in support of its position. First, according to the IRS, when an assessment is made, the resulting “debt” is based on the assessment, not upon the subsequently filed tax return. This tax debt cannot be dis-chargeable under § 523(a)(1)(B)® if it is not actually based on a filed tax return. Alternatively, the IRS contends that a Form 1040, filed after an assessment is made and collection efforts are initiated, does not constitute a “return” within the meaning of § 523(a)(1)(B) for purposes of determining dischargeability. The IRS has not raised any issues with the form and content of the Martins’ Form 1040s; the IRS only takes issue with the timing of the Form 1040s’ filing in relation to the assessments and collection activity.
ANALYSIS AND CONCLUSIONS OF LAW.
The Chapter 7 Discharge. Generally, and with few exceptions, a chapter 7 debtor will receive a discharge of all debts that arose before the petition date. See § 727(b). Section 523 of the Bankruptcy Code defines the kinds of debts that are excepted from the discharge. When a dispute arises, these exceptions to discharge should be strictly construed against the
The discharge exception applicable here is found in § 523(a)(l)(B)(i).
The Deñnition of a Tax “Return”: the Beard Test. Prior to enactment of the BAPCPA in 2005, the term “return” was undefined by the Bankruptcy Code. As a result, many courts, including the Court of Appeals for the Ninth Circuit (the “Ninth Circuit”), adopted the four-element test developed by the tax court in Beard v. Commissioner,
Relying on Supreme Court precedent, the tax court in Beard set forth the requirements for a valid tax return (the “Beard Test”). See
In pre-BAPCPA nondischargeability cases, the dispute generally focused on the fourth Beard Test element,
With enactment of the BAPCPA in 2005, Congress attempted to clarify the meaning of the term “return” by adding a “hanging paragraph” to the end of § 523(a). See BAPCPA, Pub.L. No. 109-8, § 714,
For 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.
§ 523(a) para, (emphasis added).
Unfortunately, Congress’s attempt to bring clarity to the process has only created more ambiguity, resulting in significant disagreement between the courts which have endeavored to apply the new law. Some courts have interpreted the BAPC-PA’s addition of the hanging paragraph to mean the end of the Beard Test. See McCoy v. Miss. State Tax Comm’n (In re McCoy),
The Tax “Debt” Is Not Established by the IRS’s Assessments. Leaving the Beard Test aside for a moment, the IRS first argues that the Martins’ tax debt is nondischargeable under § 523(a)(l)(B)(i) because the underlying “debt” is established by the IRS’s assessments, rather than the Form 1040s that the Martins filed
However, the IRS’s argument is unpersuasive and will not be adopted by this court. The IRS has not cited any binding authority for this interpretation of the Bankruptcy Code, and the court has only found two decisions, both unpublished, that seem to agree with the IRS. See Smythe,
The statutory definitions of “debt” and “claim” focus on the nature and source of the debt (federal income tax liability), not the mechanism to determine the debt (assessment versus return). Under these definitions, a debtor has a “debt” when a right to payment accrues, regardless of how or when the extent of the debtor’s liability becomes fixed or due.
At the end of each [taxable year], the United States had a right to payment of income tax for [the] year (although un-matured and unfixed), and the Debtor was liable for the tax at the time. Thus, the Debtor had a debt that existed regardless of the Debtor’s filing of the return or the IRS’s assessment. The distinction between assessment and return is not relevant to the existence of a “debt” for bankruptcy purposes or to the dischargeability inquiry under § 523(a)(1)(B).
Interpretation of the Hanging Paragraph. Turning to the IRS’s alternative argument, the court now shifts its attention to § 523(a)’s hanging paragraph to determine what falls within the “requirements of applicable nonbankruptcy law (including applicable filing requirements).” Specifically, in this case, the court must
Again, the courts are split in their response to this question, and three approaches have emerged. First, the Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) has adopted a rigid, unforgiving interpretation in McCoy (hereinafter referred to as the “one-day-late” result), with most courts following McCoy and its bright-line test. See Pendergast v. Mass. Dep’t of Revenue (In re Pendergast),
Conversely, some courts have adopted the Court of Appeals for the Sixth Circuit’s (the “Sixth Circuit”) pre-BAPCPA approach in Hindenlang, which judicially constructed a more flexible, but seemingly arbitrary answer to this question (hereinafter referred to as the “post-assessment” approach). See Martin,
For the reasons set forth below, this court declines to adopt either the one-day-late result or the post-assessment approach and will instead apply the minority no-time-limit interpretation to the hanging paragraph.
The Fifth Circuit’s One-Day-Late Result. In McCoy, the Fifth Circuit applied a literal and seemingly harsh interpretation of the hanging paragraph by holding that, with certain limited exceptions, a “return that is filed late under the applicable nonbankruptcy ... law is not a ‘return’ for bankruptcy discharge purposes under § 523(a).”
The Fifth Circuit’s analysis looked strictly at the plain language of the first sentence of the BAPCPA’s hanging paragraph. See id. at 928-29 (emphasizing that “the plain language meaning of the [Bankruptcy] Code should rarely be trumped” even if “awkward” or “ungrammatical” (alteration in original) (internal quotation marks omitted)). Under the McCoy interpretation, the statutory due date for filing a tax return represents one of the “applicable filing requirements” referred to in the first sentence. See id. at 928. For federal income taxes, a tax return must be filed, unless an extension has been granted,
Although some courts adopting this strict interpretation have acknowledged its potentially harsh results, they reasoned that the plain language of the statute should nevertheless control. See Pender-gast,
First, it is difficult, if not impossible, to harmonize the one-day-late interpretation with the hanging paragraph’s second sentence. See Wogoman,
Here, if the first sentence of the hanging paragraph is construed to support the one-day-late result (i.e., excluding any late-filed document from the definition of a “return”), then that interpretation is internally inconsistent with the second sentence’s reference to an IRC § 6020(a) return, and it also renders the second sentence’s reference to an IRC § 6020(b) return meaningless. This is because returns filed pursuant to both IRC §§ 6020(a) and 6020(b) are necessarily “late” returns. The IRS would not even prepare these “substitute” returns until some time after the taxpayer has failed to timely file his or her own return (i.e., once the April 15 statutory deadline has passed). See IRC § 6020(a),
Thus, it is contradictory to impose McCoy’s strict temporal condition in the definition of “return,” while including a necessarily late IRC § 6020(a) return as one of those “returns.”
Additionally, Congress has already addressed the “time-of-filing” question in another manner, which further supports the conclusion that timely filing is not a “requirement” in the hanging paragraph. Specifically, the Bankruptcy Code deals with a late-filed return in § 523(a)(l)(B)(ii), and McCoy’s one-day-late interpretation would render that subsection meaningless as well. See Rhodes,
Lastly, the court must also consider the argument that the one-day-late interpretation of the hanging paragraph yields a potentially absurd result. See Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A.,
In conclusion, because the one-day-late interpretation would (1) make it impossible to read the first and second sentences of the hanging paragraph in harmony, (2) render § 523(a)(l)(B)(ii) superfluous, and (3) produce a potentially absurd result, this court declines to adopt the one-day-late interpretation of the hanging paragraph and concludes that timely filing is not a “requirement” for determining what constitutes a tax “return” for dischargeability purposes.
The Sixth Circuit’s Post-Assessment Approach. The court turns now to the post-assessment approach originating from the Sixth Circuit’s pre-BAPCPA decision in Hindenlang applying the Beard Test. It stands for the proposition that a late-filed tax return can still constitute a “return” within the meaning of § 523(a)(1)(B) and the hanging paragraph up until the time the IRS makes an assessment and commences collection efforts for that tax year. Immediately after the IRS makes its assessment, then as a matter of law any document the debtor may file, including, as here, the official Form 1040, loses its identity as a tax return for dischargeability purposes, even though it may be accepted by the IRS and processed for all other purposes for which a tax return is required. See Mallo,
The post-assessment approach forces us to revisit the initial question asked by the court: does “applicable nonbankruptcy law” referred to in § 523(a)’s hanging paragraph contemplate that timely filing is a “requirement” in the definition of a tax return, or does it not? The answer can be “yes” only if relevant tax statutes, regulations, or case law provides for such a requirement. Courts adopting the one-day-late result answer with a “yes,” citing to tax statutes such as IRC § 6072(a) as support for the temporal requirement. However, the court has already explained the difficulty with application of the one-day-late result above, so McCoy’s strict temporal rule does not work.
The IRS disagrees with McCoy’s one-day-late result but still argues that the answer to the court’s question is “yes” based on a different theory, the post-assessment approach. However, where is the support from “applicable nonbankrupt-cy law” for such a requirement that a return must be filed before the IRS makes its assessment? In response, the IRS offers Hindenlang and the cases following it as support. Yet, while the court agrees that the Beard Test in its basic form may represent a part of the “applicable non-bankruptcy law” referenced in the hanging paragraph,
Additionally, in light of the policy to strictly construe dischargeability exceptions against the creditor, see Riso,
For these reasons, the court cannot adopt the post-assessment approach as support for the proposition that the time of filing is a “requirement” in the hanging paragraph’s definition of a tax return for dischargeability purposes.
The No-Time-Limit Minority View. After careful consideration of the arguments for and against the various solutions to this problem, the court is persuaded that the most reasonable and consistent interpretation of the hanging paragraph comes from the minority no-time-limit approach, derived from the Eighth Circuit’s pre-BAPCPA decision in Colsen also applying the Beard Test. As mentioned above, the court agrees that the tax court’s Beard Test can be considered as part of the “applicable nonbank-ruptcy law” referenced in the hanging paragraph and rejects McCoy’s conclusion that the BAPCPA eliminated the need to rely on the Beard Test. However, in deciding which version of the Beard Test to apply, the court must side with Colsen over Hindenlang. Colsen’s observation — that “the fourth Beard criterion contains no mention of timeliness,”
In Colsen, the Eighth Circuit acknowledged the post-assessment approach taken in Hindenlang but declined to follow it or impose any temporal condition in the definition of a tax “return” for dischargeability purposes. See Colsen,
[T]he fourth Beard criterion contains no mention of timeliness or the filer’s intent. We have been offered no persuasive reason to create a more subjective definition of “return” that is dependent on the facts and circumstances of a taxpayer’s filing. We think that to do so would increase the difficulty of administration and introduce an inconsistency into the terminology of the tax laws. We therefore hold that the honesty and genuineness of the filer’s attempt to satisfy the tax laws should be determined from the face of the form itself, not from the filer’s delinquency or the reason for*732 it. The filer’s subjective intent is irrelevant.
Id. Thus, although the Beard Test does represent “applicable nonbankruptcy law” referred to in the hanging paragraph, “[that] requirement that the return ‘must represent an honest and reasonable attempt to satisfy the requirements of the tax law’ does not incorporate a timeliness requirement.” Rhodes,
Although the IRS opposes Colsen’s no-time-limit interpretation, it has not identified any “applicable nonbankruptcy law” that requires a return to be filed by a certain time in order to qualify as a “return.” See Hindenlang,
The only temporal consideration that this court could locate in the tax law is the April 15 filing deadline under IRC § 6072(a). However, unlike other requirements imposed by applicable tax law, a taxpayer’s failure to timely file a return by this statutory deadline does not defeat the purpose of the return or render it a nullity;
Additionally, despite the supposed “requirement” that a tax return be filed before the IRS makes its assessment, the IRS’s own actions suggest that this is not actually a “requirement” within the meaning of the hanging paragraph after all. A “requirement” means “something essential to the existence or occurrence of something else.” Webster’s New Explorer Encyclopedic Dictionary 1561 (Federal Street Press 2006). Thus, to give meaning to the statutory term “requirements” in the hanging paragraph, a document should be considered a “return that satisfies the requirements of applicable nonbankruptcy law” only if the document meets all — not
Here, notwithstanding this supposed temporal “requirement” and the Martins’ failure to comply with it, the IRS nevertheless accepted and recognized the Martins’ Form 1040s as legitimate “returns” when it increased the assessed tax liability for 2005 and partially abated the tax liability for 2004 and 2006. See IRC § 6201(a)(1) (requiring the IRS to “assess all taxes determined by the taxpayer or by the [IRS] as to which returns or lists are made under this title” (emphasis added)); IRC § 6404(b) (providing that a taxpayer is not entitled to file a “claim for abatement”); see also Colsen,
Given that (1) “applicable nonbankrupt-cy law” does not exclude a late-filed tax reporting document from being accepted and processed as a “return” for tax purposes, and that (2) the IRS in this case did, in fact, accept the Martins’ late-filed Form 1040s and adjusted their tax liability accordingly, the court concludes that filing a tax return before the IRS’s assessment is not one of the “requirements of applicable nonbankruptcy law (including applicable filing requirements)” under the hanging paragraph. The no-time-limit interpretation must be adopted because it appears to be the only result that is consistent with applicable tax law and actual tax practice.
Applicability of the Hatton Decision. Before concluding, the court will address the IRS’s offer to follow the Ninth Circuit’s pre-BAPCPA decision in Hatton.
In Hatton, the debtor never filed a Form 1040 for his 1988 federal income tax.
Looking at the four elements of the Beard Test, the Ninth Circuit concluded that neither the IRC § 6020(b) return nor the installment agreement constituted a tax return, as a matter of law, within the meaning of § 523(a)(l)(B)(i). Id. at 1061. Looking at the form and content of the documents, the court was able to dispose of the issue based on the second element of the Beard Test, which required purported returns be executed under penalty of perjury:
The installment agreement and the substitute return fail to qualify as a return under Beard. First, neither document was signed under the penalty of perjury. The substitute return was never signed by [the debtor], and although the installment agreement contains [the debtor’s] signature, his signature was not provided under the penalty of perjury. Therefore, under Beard, [the debt- or] failed to file a tax return.
Id. (citation omitted).
After concluding that the debtor had “failed to file a tax return” under the second Beard Test element, the court went on to address the fourth element. Id. It concluded that the IRC § 6020(b) return and the installment agreement, documents prepared by the IRS, also did not “represent an honest and reasonable attempt [by the debtor] to satisfy the requirements of the law.” Id. The Ninth Circuit explained,
It is undisputed that [the debtor] failed to file a federal tax return on his own initiative for the 1983 tax year as required by section 6012 of the I.R.C. It is also undisputed that [the debtor] never attempted to cure this failure until after the IRS had assessed his tax deficiency and initiated a delinquency investigation. It was only after the IRS threatened to levy his wages and bank account and seize his personal property that [the debtor] elected to cooperate with the IRS. Moreover, even after [the debtor] finally responded to the notices sent by the IRS, it still took months of negotiations before the IRS and [the debtor] could agree on a settlement that ultimately resulted in the installment agreement.
... [The debtor’s] belated acceptance of responsibility, however, does not constitute an honest and reasonable attempt to comply with the requirements of the tax law. Instead, [the debtor] made every attempt to avoid paying his taxes until the IRS left him with no other choice. Because [the debtor] never filed a return and only cooperated with the IRS once collection became inevitable, the bankruptcy court erred in concluding that section 523 did not except [the debtor’s] tax liability from discharge.
Id. (citation omitted).
Relying on the Ninth Circuit’s discussion of the fourth Beard Test element, the IRS essentially argues that this circuit has adopted the Sixth Circuit’s post-assessment approach discussed above. However, for several reasons, this court is not persuaded that the Ninth Circuit went so far as to decree a per se rule that a document
First, the Hatton decision came before the BAPCPA’s introduction of the hanging paragraph, so the Ninth Circuit was not called to determine whether the time of filing a return is a “requirement[ ] of applicable nonbankruptcy law.” The circuit court was simply considering the facts before it, and those facts did not include a debtor filing a Form 1040 after the IRS had made its assessment. Further, there is no indication that the Ninth Circuit intended to go beyond its facts and broadly hold that all efforts by a debtor to satisfy the tax laws once the IRS begins its assessment, such as by filing his or her own return, would never be considered honest and reasonable as a matter of law. Thus, Hatton cannot be construed as proclaiming a per se post-assessment rule.
Second, the Ninth Circuit’s discussion of the honest-and-reasonable-attempt inquiry may be dictum. The court had already decided that the debtor’s documents failed to satisfy the second Beard Test element, and there was no reason for the court to further discuss or consider the fourth Beard Test element of whether the debtor acted honestly and reasonably on the facts of that case. Had the debtor’s delinquency, and his subjective reasons for it, truly been the deciding issue, then resolution of the case by summary judgment (in favor of the IRS) would have been improper and the case should have been remanded for an evidentiary hearing.
Third, even though the Ninth Circuit did conclude as a matter of law that the debt- or’s documents did not represent an honest and reasonable attempt to satisfy tax laws, the facts in Hatton, particularly the circumstances surrounding the documents at issue, were significantly different than those in this case. There, the debtor never attempted to prepare any of the documents that would have reported his tax liability himself. The IRS was completely on its own in having to make that calculation, which it ultimately did when it prepared the debtor’s substitute return. Then, once the tax was determined, the debtor continued to delay any resolution with months of negotiations before entering into the installment agreement. Also, at no point did the debtor contest the amount of his tax liability calculated by the IRS and set forth his own calculation. As the Ninth Circuit pointed out, “[the debt- or] never filed a return and only cooperated with the IRS once collection became inevitable.” Id. at 1061.
Here, in contrast, the Martins did not rely on the IRS’s calculation of their tax liability nor did they wait until the last possible moment to accept responsibility. Instead, the Martins hired an accountant and commissioned the preparation of their own Form 1040s shortly after receiving the IRS’s 90-day letter. Although the IRS did receive the Form 1040s in an untimely manner, there is no dispute that the Form 1040s were accurately and properly prepared. In fact, the IRS accepted those documents and the information contained within them and adjusted the Martins’ tax liability as a result of that disclosure. Based on these facts, the court is not persuaded that the Ninth Circuit would necessarily apply Hatton and rule that (1) timely filing of a tax return is now a “requirement” of applicable nonbank-ruptcy law, and (2) the Martins’ Form 1040s did not, as a matter of law, represent an honest and reasonable attempt to satisfy the tax laws.
For these reasons, it is not clear that the Ninth Circuit’s discussion in Hatton has application in this case with regard to the time-of-filing issue. The court finds the Hatton decision to be distinguishable
CONCLUSION.
Based on the foregoing, the court finds and concludes that the Martins’ Form 1040 tax returns for the years 2004, 2005, and 2006 were “returns” within the meaning of § 523(a)(l)(B)(i) and § 523(a)’s hanging paragraph. The court declines to adopt either the Fifth Circuit’s one-day-late result or the Sixth Circuit’s post-assessment approach urged by the IRS to define what constitutes a tax return for purposes of determining dischargeability of the tax debt. Instead, the court relies on the Eighth Circuit’s no-time-limit interpretation to conclude that the “requirements of applicable nonbankruptcy law (including applicable filing requirements)” do not include a temporal restriction.
Accordingly, the IRS’s Motion will be denied, and the court will enter judgment in favor of the Martins declaring that their 2004, 2005, and 2006 federal income tax debt was discharged in this chapter 7 bankruptcy.
Notes
. Unless otherwise indicated, all chapter, section, and rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330, and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9036, as enacted and promulgated after October 17, 2005, the effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, Pub.L. No. 109-8, 119 Stat. 23. References to "IRC” are to the Internal Revenue Code, 26 U.S.C. §§ 1-9834.
. See IRC § 6212(a).
. See IRC § 6213(a).
. See IRC §§ 6201, 6203.
. See IRC § 6331(d).
.For 2004, the IRS abated $1,074 of the tax liability, decreasing the assessment to $17,358; for 2005, it assessed an additional $4,924 in liability, increasing the assessment to $14,852; and for 2006, the IRS abated $5,123 of the liability, decreasing the assessment to $27,010.
. Pis.’ Compl. 1, July 30, 2012, ECF No. 1.
. Def.’s Answer 3:2, Nov. 8, 2012, ECF No. 13.
. One of the documents attached to the original pleading contained personal identifying information, which should not have been placed in the public record pursuant to Bankruptcy Rule 9037. On December 14, 2012, this court issued an order restricting the original pleading from public access and requiring that the Martins file a properly redacted form of the pleading. A one-page "Amended Complaint” was then filed on January 18, 2013.
. Indeed, the IRS accepted the Form 1040s and processed them to determine the amount of the tax debt, just as if they had been timely filed. As a result, the IRS only seeks relief for the adjusted amount of assessed taxes due after the Form 1040s were filed. The IRS concedes that the post-assessment increase for the 2005 tax liability, along with all interest and penalties, was discharged.
. In its entirety, § 523(a)(1)(B) identifies two categories of tax debts which are excepted from discharge:
(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt—
(1) for a tax or a customs duty—
(B) with respect to which a return, or equivalent report or notice, if required—
(i) was not filed or given; or
(ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition....
Here, it is undisputed that the Martins filed their Form 1040s for the tax years 2004, 2005, and 2006 more than two years before their bankruptcy. Therefore, the discharge exception in § 523(a)(l)(B)(ii) is not applicable in this case.
. Here, there is no dispute that the Martins' Form 1040s satisfy the first three elements of the Beard Test.
. If the IRS grants an extension, that filing deadline would typically be extended another six months. See IRC § 6081(a).
. The IRS candidly disclosed its reluctance to advocate for the one-day-late result, stating, “The United States does not adopt this position, which creates a harsh result that appears inconsistent with the statute’s intent.” Def.'s Mem. Supp. Summ. J. 12:20-21, July 30, 2013, ECF No. 47.
. In response, those courts adopting the one-day-late result have reasoned, without much analysis, that the reference to an IRC § 6020(a) return is intended to represent a very narrow exception or safe harbor to the general definition of a ‘'return” found in the first sentence. See McCoy,
. Further, the reference to an IRC § 6020(b) return in the hanging paragraph is superfluous since an IRC § 6020(b) return is not a "return” for statute-of-limitations purposes under "applicable nonbankruptcy law.” See IRC § 6501(b)(3) ("Notwithstanding the provisions of paragraph (2) of section 6020(b), the execution of a return by the Secretary pursuant to the authority conferred by such section shall not start the running of the period of limitations on assessment and collection.”).
.Specifically, that provision states that a tax debt "with respect to which a return ... if required ... was filed or given after the date on which such return ... was last due, under applicable law or under any extension, and after two years before the [petition date]” is not discharged.
. In response to this argument, one court has suggested that an IRC § 6020(a) return may qualify as a late-filed return under § 523(a)(l)(B)(ii), meaning that subsection would not be rendered meaningless by the one-day-late interpretation. See Pendergast,
. Def.’s Mem. Supp. Summ, J. 12:20-21, July 30, 2013, ECF No. 47.
. The Beard Test in general has remained a widely accepted authority for determining what constitutes a “return” in a variety of tax contexts. The IRS has referenced the Beard Test in its revenue rulings and other materials. See Rev. Rui. 2005-59, 2005-
. For example, a purported return, which has not been signed under penalty of perjury as required by IRC §§ 6061 and 6065, is deemed an invalid return. See Olpin v. Comm’r,
. Specifically, the IRS has argued that "Col-sen is inconsistent with the Ninth Circuit’s treatment of this issue in [Hatton ] and should not be followed.” Def.'s Mem. Supp. Summ. J. 15:12-13, July 30, 2013, ECF No. 47.