Smythe v. United States (In re Smythe) (Bankr. W.D.Wash., 2012) This is a very wise case. As I've written about previously, the 5th Circuit Matter of McCoy case was just too harsh. It held that if you filed your income tax returns even one day late, your tax returns could never qualify as tax returns for purposes of discharging the taxes in bankruptcy and you could never discharge those taxes in bankruptcy, even if you waited two years after you filed the returns to file bankruptcy, like the bankruptcy law says.

This case talks about the McCoy case, but even the I.R.S. doesn't take that extreme a position. In this Smythe case, the I.R.S. says, and the Court agrees, that a debtor can file taxes late, and still discharge them, so long as the I.R.S. has not already prepared "SFR" or Substitute for Return tax returns, and there has already been an assessment. Bravo, I hope this is the law from now on, that is what some other practitioners that I have been talking to were predicting. Great decision.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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