Central District Consumer Bankruptcy Attorney's Association

Don't quote me on this because I am not a tax expert - I think the IRS agent is saying Nov 16, 2012 because that would be three years from filing of the tax return. There is a 3 year statute of limitations in which the IRS can assess taxes (unless there is fraud or no return filed). If the tax is still assessable at time of filing the BK it is not dischargeable. This is a separate and distinct rule from those listed below (according to my NACBA conference materials).
Shannon A. Doyle
Attorney at Law
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Tel: (626) 646-2555
Fax: (626) 332-8644
www.blclaw.com

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Hi Link:
I know these rules. So my question remains; where do you think the hypo I gave falls.
2008 tax year filed November 16, 2009.
I file Chapter 7 on October 22, 2012 for client.
2 years obviously met. Assume no further assessments or willful tax evasion or fraud.
Is 2008 discharged, or should I have waited to file after November 16th?
Steve

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Morgan King gives 5 rules for discharging income tax in chapter 7 which include:
1) The Three-Year Rule: For the tax year in question - the most recent due date for filing the return is more than three years old. The three-year period is computed from most recent date the tax return is due for the tax year (typically April 15 of the year following the taxable year). An extension to file the return delays the start time. 11 U.S.C. Section 507(a)(8)(A)(i). Do not confuse with the 2-year rule.
2) The Two-Year Rule: A tax return or equivalent report or notice, if required, has been filed or given by the taxpayer for the tax year(s) in question at least more than two years preceding the filing date of the bankruptcy. 11 U.S.C. 523(a)(1)(B).
3) The 240-Day Rule: The tax claim was assessed at least more than 240 days preceding the filing date of the bankruptcy. 11 U.S.C. Section 507(a)(8)(A)(ii).
4) Non-Fraudulent Return: The tax return in question was non-fraudulent. 11 U.S.C. Section 523(a)(1)(C).
5) No Willful Tax Evasion: The taxpayer has not engaged in activity deemed a willful attempt to defeat or evade the tax. 11 U.S.C. Section 523(a)(1)(C).
There is a much more detailed analysis available from Mr. King at www.morganking.com.
Link Schrader, Attorney
Law Office of Link W. Schrader

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I'm having an "argument" with an enrolled agent about the dischargeability of a client's 2008 tax year, which as you all may know is the most recent tax year dischargeable to date.
Client filed the 2008 tax return on November 16, 2009, about a month after it was due in October 2009.
The question is whether it is a priority tax under 11 U.S.C. 507. Priorities are nondischargeable and non-priorities are.
11 U.S.C. 507(a)(8)(A)(i) makes the "3 year rule" as such: "for which a return, if required, is last due, including extensions, after three years before the date of the filing of the petition." Emphasis on "due" added.
Hence, I believe that filing her on October 22nd or later is sufficient, and the EA believes I have to wait until after 11/16/12.
Who is correct? Btw, there are no assessments.
Law Offices of Steven B. Lever
>
> Steven B. Lever
>( Tel. (562) 436-5456 ext. 1
>( Fax (562) 485-6886
>* sblever@leverlaw.com

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