Free Phone Discussion 480-507-5985


Florida Bankruptcy Court rejects McCoy – uses “Beard” test

Posted by Michael S. Anderson | Sep 29, 2015 | 0 Comments

change-thumb-375x249-60735 change-thumb-375x249-60735 A recent case out of the US Bankruptcy Court in the Southern District of Florida, Coyle v. U.S., has rejected the McCoy line of cases and relied on the beard test to determine whether tax debt based on returns filed after IRS assessment can be discharged.  The taxpayer in question filed returns after the IRS created substitute returns and based it's assessment on them. The Court cited Pendergast v. Mass. Dept. of Revenue 510 B.R. 1 (B.A.P 1st Cir., 2014) and wrote that “if a return is filed late, discharge-ability depends on the taxpayer's cooperation with the taxing authorities”.  It rejected the McCoy reasoning and stated that it agreed “with the IRS and those courts that have rejected a narrow reading of the Hanging Paragraph under which the only late filed returns eligible for discharge pursuant to Sect. 523 (a)(1)(B)(ii) are returns filed under Sect. 6020(a)” This is a small bit of good news for taxpayers with large tax debts who are contemplating bankruptcy and have filed the return(s) late.  It isn't good news for those who filed late and filed after the IRS assessed a debt based on an IRS Substitute Return. If you live in the 9th Circuit, the IRS position mirrors this case and is currently how cases are being treated in Arizona.  This could change.

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizonans with tax debt problems for almost two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS and other debt problems. He provi...


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Contact Us Today

If you have an IRS debt and are struggling with it, make a call to our office and ask to speak with the Attorney about it. We like to discuss the situation on the phone for free to ask you some questions, answer some of yours and to determine whether it may make sense for us to help. We’ve helped several thousand clients with tax debt problems over the last two decades. We’ll tell you the truth about your options and help you find the best one.