Tax debt is not discharged in bankruptcy where taxpayer’s late return is filed after IRS already assessed the tax

In re Wogoman, --- B.R. ----, 2012 WL 2562323 (10th Cir. BAP (Colo.) 2012)

The United States Bankruptcy Appellate Panel (BAP) for the Tenth Circuit has held that a debtor's Form 1040 filed after IRS had assessed the tax liabilities for the year involved did not qualify as a return, as defined in 11 USC 523(a)(19). As a result, the tax debt relating to this return was excepted from discharge under 11 USC 523(a)(1)(B)(i).

Background:  A Bankruptcy filing can discharge taxes as long as the tax return is filed more than three years prior to the bankruptcy filing.  However, where the return was filed late and the Internal Revenue Service already assessed tax based upon no return being filed in that year, the 10^th Circuit determined the taxes for such year is not dischargeable in bankruptcy.

Thus, before filing bankruptcy, one should learn whether a late return was filed after an Internal Revenue Service assessment and be guided accordingly.