Wogoman v. Internal Revenue Service (In re Wogoman)

475 B.R. 239
CourtBankruptcy Appellate Panel of the Tenth Circuit
DecidedJuly 3, 2012
DocketBAP No. CO-11-084; Bankruptcy No. 11-11044; Adversary No. 11-01117
StatusPublished
Cited by18 cases

This text of 475 B.R. 239 (Wogoman v. Internal Revenue Service (In re Wogoman)) is published on Counsel Stack Legal Research, covering Bankruptcy Appellate Panel of the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wogoman v. Internal Revenue Service (In re Wogoman), 475 B.R. 239 (bap10 2012).

Opinion

OPINION

CORNISH, Bankruptcy Judge.

The question we are asked to decide on appeal is whether the Form 1040 filed by the debtors approximately 17 months after the IRS had determined and assessed their taxes is a return for purposes of exception to discharge. The debtors appeal the bankruptcy court’s order determining that their federal income tax liability for tax year 2001 is excepted from discharge pursuant to 11 U.S.C. § 523(a)(1)(B)(i).1 Section 523(a)(1)(B)® provides that a debtor is not discharged from any debt for a tax with respect to which a return was not filed. Having reviewed the record and applicable law, we hold the debtors’ Form 1040 filed post-assessment is not a return, and affirm the bankruptcy court’s order.

I. BACKGROUND FACTS2

Debtors Mitchell J. Wogoman and Holly L. Wogoman (the ‘Wogomans”) filed their petition for Chapter 7 relief on January 20, 2011. On February 18, 2011, they filed their complaint initiating this adversary proceeding against the Internal Revenue Service (“IRS”) to determine the dis-changeability of their federal income taxes for tax years ending December 31st of 1998, 2000, 2001, 2002, and 2005.

The IRS filed an answer to the Wogo-mans’ complaint on March 21, 2011, and an amended answer on March 25, 2011. In its answer, the IRS stated that the Wogo-mans had no outstanding tax liability for tax year 2000, and admitted that their tax liabilities for tax years 1998, 2002, and 2005 were dischargeable. Thus, the only disputed issue presented to the bankruptcy court for resolution was whether taxes owed by the Wogomans for the taxable year 2001 were excepted from discharge pursuant to § 523(a)(1)(B)(i) for failure to file a return.

The bankruptcy court entered its discharge order in the bankruptcy case on May 16, 2011. The IRS filed a motion for summary judgment in this adversary proceeding on July 1, 2011, to which the Wog-omans did not respond. However, the Wogomans filed their own motion for summary judgment on July 6, 2011, to which the IRS responded on July 20, 2011. The following is a description of the factual circumstances surrounding the 2001 tax liability that gives rise to this dispute.

The Wogomans did not file a return for tax year 2001 by the April 15, 2002 due date, or by the extended due date of August 15, 2002. In October 2003, the Wogo-mans’ tax preparer sent them a letter pointing out they had not filed a return for their federal 2001 income taxes and needed to take action.

The IRS commenced an examination in 2004 to determine the Wogomans’ delin[242]*242quent 2001 tax liability. After establishing a proposed tax liability, the IRS issued a statutory notice of deficiency notifying the Wogomans of the deficiency and their right to challenge it in United States Tax Court. The Wogomans did not challenge the deficiency.

On February 21, 2005, the IRS assessed the deficiency for the 2001 taxes. The Wogomans did not pay the assessed liability, but filed a Form 1040 for tax year 2001 on August 1, 2006. The IRS then abated part of the Wogomans’ 2001 income tax liability and associated penalties on November 13, 2006. On March 23, 2007, the Wogomans entered into an installment agreement with the IRS to pay the remaining 2001 taxes and penalties, and subsequently made approximately 20 payments under the agreement.

On summary judgment before the bankruptcy court, the IRS argued that, if at the time taxes are assessed no return has been filed, then the debt recorded by the assessment is a debt with respect to which no return has been filed and § 523(a)(1)(B)(i) excepts it from discharge. The Wogomans argued that the express statutory language of § 523(a)(1)(B)(i) does not require that a return be filed prior to assessment in order to be effective for dischargeability purposes. Based on the pleadings, the bankruptcy court entered its order on August 19, 2011, ruling that the 2001 tax debt “is nondischargeable because it came into existence prior to the filing of the Form 1040 by the Wogomans in 2006.”3 The Wogomans timely filed a notice of appeal with this Court on September 1, 2011.

II. APPELLATE JURISDICTION

This Court has jurisdiction to hear timely-filed appeals from “final judgments, orders, and decrees” of bankruptcy courts within the Tenth Circuit, unless one of the parties elects to have the district court hear the appeal.4 Neither party elected to have this appeal heard by the United States District Court for the District of Colorado. The parties have therefore consented to appellate review by this Court.

A decision is considered final “if it ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ”5 In this case, the order and judgment of the bankruptcy court determining the Wogomans’ 2001 tax liability was not dischargeable terminated the adversary proceeding. Nothing remains for the bankruptcy court’s consideration. Thus, the decision is final for purposes of review.

III. STANDARD OF REVIEW

A ruling on summary judgment is reviewed de novo, applying the same legal standard used by the bankruptcy court.6 Summary judgment is appropriate “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.”7 “In reviewing a summary judgment motion, the court is to view the rec[243]*243ord ‘in the light most favorable to the nonmoving party.’ ”8

The facts of this case are undisputed. The Wogomans appeal the bankruptcy court’s interpretation of § 523(a)(1)(B)(i). Thus, only a legal issue is presented on appeal. Legal questions are reviewed de novo.9 De novo review requires an independent determination of the issues, giving no special weight to the bankruptcy court’s decision.10

IV. ANALYSIS

At issue in this appeal is interpretation of the exception to discharge for taxes described in § 523(a)(1)(B)(i), which provides as follows:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 8(b) of this title does not discharge an individual debtor from any debt—
(1) for a tax or a customs duty—
(B) with respect to which a return, or equivalent report or notice, if required—
(i) was not filed or given[.]11

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) added language relevant to this exception in a “hanging paragraph” that follows § 523(a)(19). The hanging paragraph, which purports to define the term “return,” provides:

For purposes of this subsection, the term “return” means a return that satisfies the requirements of applicable non-bankruptcy law (including applicable filing requirements).

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Cite This Page — Counsel Stack

Bluebook (online)
475 B.R. 239, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wogoman-v-internal-revenue-service-in-re-wogoman-bap10-2012.