Bankruptcy Law — Rethinking the Discharge of Late Filed Taxes in Consumer Bankruptcy

Abstract

The 2005 amendments to the Bankruptcy Code, Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was enacted in order to improve bankruptcy law. However, BAPCPA has made the issue of whether late-filed taxes are dischargeable even murkier than before the amendments. After BAPCPA, some courts continued to analyze claims as they had before the amendment. Others used a “one-day-late rule” that prevented late-filed taxes from being dischargeable — even if the taxes were filed only one day late. This Article suggests a different approach. It argues that the legislature intended tax debt associated with late-filed income tax returns be dischargeable if the return is filed within two years of the due date.

Keywords: bankruptcy, Bankruptcy Abuse Prevention and Consumer Protection Act, BAPCPA, United States, income taxes