Friday, May 5, 2006
We recently blogged the case of Payne v. United States, No. 05-1941 (7th Cir. 12/14/05), in which Judge Richard Posner and Judge Frank Easterbrook differed over the validity of a post-assessment tax return in a bankruptcy proceedding. Judge Posner sided with the Fourth (Moroney v. United States, 352 F.3d 902 (4th Cir. 2003)) and Sixth (Hindenlang v. United States, 164 F.3d 1029 (6th Cir. 1999)) Circuits in concluding for the majority that a return filed after the assessment of tax does not constitute a valid "return" and thus does not allow a taxpayer to discharge his tax liabilities in bankruptcy; Judge Easterbrook dissented. We also blogged Bryan Camp's recent article on the Posner-Easterbrook split in The Function of Forms, 110 Tax Notes 531 (Jan. 30, 2006).
The Eighth Circuit yesterday in Colsen v. United States, No. 05-2476 (8th Cir. 5/4/06), sided with Judge Easterbrook's dissent in holding that a post-assessment return counts as a valid "return" and thus makes the underlying tax liability eligible for discharge in bankruptcy. For further analysis, see Joe Kristan.