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Amended tax return and dischargeability
Hypo:
Client filed IRS income tax return for 2001 on 9/16/02, which showed
an amount owing of about $44,000. FTB return was filed on 8/15/02.
Client paid only $25,000 of the IRS tax.
On 2/26/04, Client filed an amended return with the IRS which reduced
the tax owing by $11,000. An amended return was also filed with the
FTB on 1/15/04 which also reduced the tax owing by about $300.
Of course, IRS assesses about $25,000 in penalties and interest for
the 2001 liability. On 4/6/04, Client filed Offer in Compromise
which was rejected on 6/8/04.
Question: Does the filing of an amended return restart the 3 year
clock for determining priority (and hence dischargeability) where the
tax is reduced as a result of the amended return?
If so, 2001 fed. tax liability would be dischargeable on 12/18/05.
If not, 2001 fed. tax liability would be dischargeable on 5/30/07.
240-day rule seems to be met. Thanks for any help on this one.
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