Opinion
6:20-bk-01616-TPG
08-07-2023
In re: Sharon Lynet Worrell, Debtor.
Chapter 13
ORDER DENYING MOTION TO ENFORCE THE DISCHARGE ORDER
Tiffany P. Geyer, United States Bankruptcy Judge
THIS CASE came on for hearing on the Debtor's "Motion to Enforce the Discharge Order" (the "Motion"). (Doc. No. 50.) Because the Debtor's filing of her tax returns falls within the prohibition against discharge under § 1328(a) and § 523(a)(1)(B)(ii) of the Bankruptcy Code, the Motion is denied.
All chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
On August 12, 2020, the Court confirmed the Debtor's plan (Doc. No. 36), which she successfully completed (Doc. No. 46), and on March 31, 2023, the Court entered an order granting the Debtor a discharge under § 1328(a) (Doc. No. 47). In the Motion, the Debtor now seeks to enforce the discharge against the IRS, arguing that it is attempting to collect on a general unsecured claim for taxes, when her confirmed plan provided that general unsecured claims were discharged at plan completion. (Doc. No. 50 ¶ 4.) The Court held a hearing on the Motion on June 14, 2023. (Doc. No. 54.) At the hearing, the Court gave the IRS fourteen days to file a response to the Motion and gave the Debtor fourteen days from the response to file a reply. (Doc. No. 54.) The IRS timely filed its response on June 28, 2023 (the "Response"). (Doc. No. 55.) The Debtor elected not to file a reply.
In the Response, the IRS argues its claim is not dischargeable under 11 U.S.C. § 523(a)(1)(B)(ii) because the Debtor late-filed her tax returns for the years 2012 through 2015 on April 28, 2020, about six weeks after the Debtor filed her Chapter 13 petition on March 16, 2020. (Id. ¶¶ 2, 5, 6.) Section 523(a)(1)(B)(ii) relevantly provides:
(a) A discharge under section . . . 1328(b) of this title does not discharge an individual debtor from any debt-
(1) for a tax . . . -
. . . .
(B) with respect to which a return, or equivalent report or notice, if required-
. . . .
(ii) was filed or given after the date on which such return, . . . was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition . . . .11 U.S.C. § 523(a)(1)(B)(ii). Although the Debtor received a discharge under § 1328(a), and not subsection (b), § 1328(a)(2) states that "the court shall grant the debtor a discharge of all debts provided for by the plan or disallowed under section 502 of this title, except any debt-- . . . of the kind specified in . . . paragraph (1)(B) . . . of section 523(a) . . . ."
The IRS contends that because the Debtor late-filed her 2012 through 2015 tax returns on April 28, 2020, she filed them after the date they were due and after two years before the petition date. The Debtor did not contest these assertions.
The Court concludes that the IRS's claim is nondischargeable under § 1328(a) and § 523(a)(1)(B)(ii). See In re Harrell, 318 B.R. 692, 696 (Bankr. E.D. Ark. 2005) (holding that taxes for which returns were filed untimely and after the Chapter 13 petition was filed were not dischargeable because § 523(a)(1)(B)(ii) "contemplates a period that begins two years prior to the petition date, extends indefinitely into the future, and thus encompasses the postpetition period."); In re Savaria, 317 B.R. 395, 400 (B.A.P. 9th Cir. 2004), disagreed with on other grounds in Joye v. Franchise Tax Bd. (In re Joye), 578 F.3d 1070, 1078 (9th Cir. 2009) (holding that it "seems apparent that the phrase 'after x years before' when used in the Bankruptcy Code is meant to encompass postpetition events."); Pansier v. United States, No. 10-C-1011, 2011 WL 1598970, at *2 (E.D. Wis. Apr. 27, 2011) (holding that the period begins two years before the bankruptcy case filing and extends after filing the petition, as "[w]ithout such a rule individuals could game the system by intentionally waiting to file overdue tax returns until such time as their bankruptcy case was moving forward toward discharge."), aff'd sub nom. In re Pansier, 451 Fed.Appx. 593 (7th Cir. 2011).
Accordingly, it is ORDERED that the Motion (Doc. No. 50) is DENIED.
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The Clerk is directed to serve a copy of this order on interested parties who are non-CM/ECF users and file a proof of service within three days of entry of this order.
ORDERED.