WILLIAM C. HILLMAN, Bankruptcy Judge.
The matter before the Court is the "Massachusetts Department of Revenue's Motion for Summary Judgment" (the "Motion for Summary Judgment") filed by the defendant the Massachusetts Department of Revenue (the "MDOR") and the "Opposition to Motion for Summary Judgment filed Massachusetts Department of Revenue" (the "Opposition") filed by the plaintiff Timothy P. Pendergast (the "Debtor"). The Debtor filed this adversary proceeding seeking a determination that certain income taxes are dischargeable, while the MDOR filed counterclaims asserting that the taxes in question are excepted from discharge pursuant to 11 U.S.C. §§ 523(a)(1)(B)(i) and/or (C). The MDOR now seeks summary judgment with respect to the first counterclaim, which the Debtor opposes. For the reasons set forth below, I will grant the Motion for Summary Judgment.
The facts necessary to decide this matter are not in dispute. On October 5, 2009, the Debtor filed his Massachusetts income tax returns for each of the tax years 2001 through 2005, as well as 2007 (the "Periods at Issue"). All returns for the Periods at Issue were overdue. Moreover, with respect to the tax years 2002 through 2005, the Debtor filed his returns after the
The Debtor filed a voluntary Chapter 7 petition on May 22, 2012. On "Schedule F — Creditors Holding Unsecured Nonpriority Claims," ("Schedule F"), the Debtor listed outstanding Massachusetts income taxes for the Periods at Issue totaling $22,321.76. As of October 12, 2012, the undisputed amount of the Debtor's outstanding tax liability for the Periods at Issue was $30,131.15. On August 21, 2012, the Debtor received a discharge.
On August 24, 2012, only three days after the discharge entered, the Debtor commenced the present adversary proceeding seeking a determination that the income tax debt for the Periods at Issue was discharged. On September 21, 2012, the MDOR filed an answer denying the allegations of the Debtor's complaint and asserting counterclaims that the taxes in question are excepted from discharge pursuant to 11 U.S.C. §§ 523(a)(1)(B)(i) and/or (C). On October 15, 2012, the Debtor filed an answer denying the allegations of the counterclaims.
The MDOR filed the Motion for Summary Judgment on February 22, 2013. On April 2, 2013, the Debtor filed the Opposition. I heard the Motion for Summary Judgment on April 5, 2013, and, after the conclusion of oral arguments, took the matter under advisement. On April 18, 2013, the MDOR filed a supplemental memorandum in further support of the Motion for Summary Judgment.
The MDOR argues that the definition of "return" provided in the "hanging paragraph" of 11 U.S.C. § 523(a) requires that a purported return "satisf[y] the requirements of applicable nonbankruptcy law (including applicable filing requirements)."
In support of this construction of the statute, the MDOR relies on a plethora of cases that have held a late-filed return can never qualify as a "return" for purposes of 11 U.S.C. § 523(a).
Alternatively, the MDOR asserts that even if I were to follow In re Brown/Gonzalez, a majority of courts have held that post-assessment tax returns do not qualify as "returns" for purposes of 11 U.S.C. § 523(a).
The Debtor argues that I should adopt Judge Hoffman's reasoning in In re Brown/Gonzalez. Relying on that case, he states that a late filed return still serves as a formal assessment pursuant to Mass. Gen. Laws ch. 62C, § 26(a).
Pursuant to Fed.R.Civ.P. 56, "the court shall grant summary judgment 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."
Section 523(a)(1)(B) of the Bankruptcy Code provides in relevant part:
Put simply, subsection (i) of 11 U.S.C. § 523(a)(1)(B) renders tax liabilities nondischargeable where the debtor fails to file a return, while subsection (ii) makes tax liabilities nondischargeable where the debtor files a return untimely and later than a date that is two years prior to the bankruptcy petition.
In 2005, BAPCPA amended 11 U.S.C. § 523(a) by adding an unnumbered "hanging paragraph" that defines the term "return" for purposes of that subsection. It states:
Section 6020(a) of the Internal Revenue Code applies to situations where the IRS prepares a tax return on behalf of a taxpayer who fails to file one, but nevertheless discloses all information necessary to prepare the return.
The first part of the first sentence of the hanging paragraph is easy enough — a "return" for purposes of 11 U.S.C. § 523(a) is defined by reference to nonbankruptcy law. In this case, the applicable nonbankruptcy law is Massachusetts state law. The present dispute arises from the meaning of the parenthetical phrase "including applicable filing requirements."
Under Mass. Gen. Laws ch. 62C, § 6,
Section 6(c) of Chapter 62C further requires that "[e]xcept as otherwise provided, returns under this section shall be made on or before the fifteenth day of the fourth month following the close of each taxable year," typically April 15th.
To determine the meaning statutory provisions, the Supreme Court has repeatedly explained that
I do not start "from the premise that this language is imprecise," but instead must "assume that ... Congress said what it meant."
At the risk of sounding overly simplistic, the filing deadline contained in Mass. Gen. Laws ch. 62C, § 6(c) would seem to be exactly the type of "filing requirements" to which the parenthetical phrase applies. The "filing requirements," to the extent that such term was separately emphasized in the parenthetical phrase, is clearly distinct from the issue of whether the attributes of any particular form qualify as a "return" under state or federal law.
Admittedly, other courts within this district have concluded that this reading "does too much violence to the statute."
Unfortunately, I must respectfully disagree with my colleagues. The fact that 11 U.S.C. § 523(a)(1)(B)(ii) applies to only a small number of cases does not render it a nullity. So long as there is at least one situation where an untimely return is still considered a "return" for purposes of 11 U.S.C. § 523(a), 11 U.S.C. § 523(a)(1)(B)(ii) will apply and have meaning.
In light of the foregoing, I will enter an order granting the Motion for Summary Judgment.
26 U.S.C. § 6020(a).
26 U.S.C. § 6020(b).
Supplemental Memorandum in Support of Massachusetts Department of Revenue's Motions for Summary Judgment, Docket No. 27 at 3 n. 1. Ultimately, the definition of "return" in 11 U.S.C. § 523(a) is simply a construct based on state law requirements and therefore, as noted by the United States Court of Appeals for the Seventh Circuit, "[i]t would not be surprising for the same word to bear two meanings in different contexts." Indianapolis Life Ins. Co. v. United States, 115 F.3d 430, 435 (7th Cir.1997). To be sure, however, the results generated by this statute have never been completely satisfying. For example, even under the Beard test, a number of appellate courts have held that a post-assessment return, even if filed more than two years prior to the bankruptcy, was not a "return" for purposes of 11 U.S.C. § 523(a)(1)(B). In re Payne, 431 F.3d 1055 (7th Cir.2005); Moroney v. United States (In re Moroney), 352 F.3d 902 (4th Cir.2004); United States v. Hatton (In re Hatton), 220 F.3d 1057 (9th Cir.2000); In re Hindenlang, 164 F.3d at 1035; In re Wogoman, 475 B.R. at 246. As aptly put by the Seventh Circuit, "[t]he legal test is not whether the filing of a purported return has some utility for the tax authorities ..." In re Payne, 431 F.3d at 1058. But see In re Brown/Gonzalez, 489 B.R. at 6 (finding that a late-filed Massachusetts income tax return serves as a formal assessment of the tax in the amount set forth therein).
Id. at 931-932. Ultimately, I am unable to discern a logical alternative that gives meaning to the parenthetical phrase regardless of whether it represents a major departure from pre-BAPCPA law.
