Tax Dischargeability for late filed return
Posted: Mon Oct 15, 2012 11:09 am
Hello Hale:
What kind of repayment plan, and which three-year rule?
You can have an installment agreement or an offer in compromise - those
are direct agreements with the IRS allowing repayment over time. Or you
can have a repayment plan through a chapter 13. Both of these presume
that the tax is already assessed, so the three-year assessment statute
of limitations is irrelevant.
Installment agreements don't toll anything. Offers in compromise do not
toll the three-year lookback rule in 11 USC 507(a)(8)(A)(i).
- John D. Faucher
818/889-8080
On 10/15/12 10:45 AM, Hale Andrew Antico wrote:
>
> John, does the possibility of a being in a repayment plan toll the
> 3-year rule?
> Hale
>
> ------------------------------------------------------------------------
> *From:* cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com] *On
> Behalf Of *John D. Faucher
> *Sent:* Sunday, October 14, 2012 2:59 PM
> *To:* cdcbaa@yahoogroups.com
> *Subject:* Re: [cdcbaa] RE: Tax Dischargeability for late filed return
>
> Hello Shannon:
> Yes, this is correct.
> Imagine a taxpayer who files her 2008 return on 10/10/2009, showing
> $12,000 owing.
> That $12,000 will be dischargeable under the three-year rule on
> 4/16/2012 if the filing was late, or on 10/16/2012 if she had an
> extension.
> Under the two-year rule, the tax is dischargeable on 10/11/2011, but
> that's irrelevant because the three-year rule trumps it.
> 507a8iii says this: If, however, at the time of the bankruptcy
> petition filing, the IRS had not yet lost the right to assess
> additional taxes for the 2008 tax year through its deficiency
> procedures (audit, statutory notice, Tax Court case), any additional
> tax it later finds for that tax year is not dischargeable. Without an
> agreement to extend the time for assessment or extenuating
> circumstances (gross understatement of income, fraud), the IRS's
> 3-year assessment window shuts on 4/15/2012 or, in the case of an
> extension, 10/15/2012.
> Let's say the IRS comes back to the taxpayer with an audit finding a
> deficiency of $4,000. So long as the IRS's right to assess that
> amount is still alive, the $4,000 is not dischargeable. Once it's
> assessed, then the $4,000 is subject to the 240-day rule.
> The $12,000 originally reported and assessed on the tax return is not
> affected in its dischargeability by any subsequent audit.
> - John D. Faucher
> 818/889-8080
>
> On 10/12/12 6:01 PM, Shannon Doyle wrote:
>>
>> It references 11 U.S.C. 507(a)(8)(A)(iii) .
>>
>> Shannon A. Doyle
>>
>> Attorney at Law
>>
>> small logo
>>
>> 100 N. Barranca Avenue, Suite 250
>>
>> West Covina, CA 91791-1600
>>
>> Tel: (626) 646-2555
>>
>> Fax: (626) 332-8644
>>
>> www.blclaw.com
>>
>> *From:*cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com] *On
>> Behalf Of *John D. Faucher
>> *Sent:* Friday, October 12, 2012 3:03 PM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* Re: [cdcbaa] RE: Tax Dischargeability for late filed return
>>
>> I'm agreeing with you as well.
>> If NACBA is preaching that there is another 3-year rule, i.e., that
>> you can't discharge a tax year that is still assessable, well, that's
>> one I've never heard of.
>>
>> - John D. Faucher
>> 818/889-8080
>>
>>
>> On 10/12/12 2:22 PM, Steven B. Lever wrote:
>>
>> So it seems like you and Mark Jessee agree with me and not the
>> EA, which is a wonderful confirmation. The EA was making me
>> slightly nervous, and I have always measured the 3 year rule from
>> the expiration of the date of last extension, if any, and not the
>> actual file date, if later. I've filed past cases on that basis
>> as well.
>>
>> Thank you for this -- I guess that's why we're bankruptcy
>> attorneys and he's an EA -- we should know better.
>>
>> *From:*cdcbaa@yahoogroups.com
>> [mailto:cdcbaa@yahoogroups.com] *On Behalf Of *Link W. Schrader
>> *Sent:* Friday, October 12, 2012 12:57 PM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* RE: [cdcbaa] RE: Tax Dischargeability for late filed
>> return
>>
>> Steve:
>>
>> 3-Year Rule -- Due date for 2008 tax return is 4/15/09 unless he
>> got an extension -- then due date is the extension date (six
>> month extension = 10/15/09) so the 3 year period would have run
>> by 10/16/12.
>>
>> 2-Year Rule -- He filed the return on 11/16/09, so the 2 year
>> period ran through 11/16/11.
>>
>> Given no assessment in last 240 days, no fraud, or willful
>> evasion, I believe the tax would not be priority tax if filed on
>> or after 10/16/12.
>>
>> I'm not sure how you arrived at 10/22/12?
>>
>> *Link Schrader, Attorney*
>>
>> Law Office of Link W. Schrader
>>
>> *From:*cdcbaa@yahoogroups.com
>> [mailto:cdcbaa@yahoogroups.com]
>> *On Behalf Of *Steven B.
>> Lever
>> *Sent:* Friday, October 12, 2012 12:10 PM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* RE: [cdcbaa] RE: Tax Dischargeability for late filed
>> return
>>
>> 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 16^th ?
>>
>> Steve
>>
>> *From:*cdcbaa@yahoogroups.com
>> [mailto:cdcbaa@yahoogroups.com] *On Behalf Of *Link W. Schrader
>> *Sent:* Friday, October 12, 2012 12:09 PM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* [cdcbaa] RE: Tax Dischargeability for late filed return
>>
>> 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
>>
>> *From:*cdcbaa@yahoogroups.com
>> [mailto:cdcbaa@yahoogroups.com]
>> *On Behalf Of *Steven B.
>> Lever
>> *Sent:* Friday, October 12, 2012 11:47 AM
>> *To:* cdcbaa@yahoogroups.com
>> *Subject:* [cdcbaa] Tax Dischargeability for late filed return
>>
>> 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 22^nd 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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