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Federal income tax return late and not within the 2-year lookback
period before the bankruptcy petition is filed. However, where
the Federal income tax return in question was due within the
3-year lookback period before the bankruptcy was filed, the tax
for the year clearly qualifies under Bankruptcy Code section
507(a)(7)(A)(i) as a priority claim and correspondingly clearly
qualifies under Bankruptcy Code section 523(a)(1)(A) for
exception from discharge.
Petitioners in effect argue that Bankruptcy Code section
523(a)(1)(B)(ii) sets forth a narrower exception from discharge
than the exception set forth in Bankruptcy Code section
523(a)(1)(A). Petitioners fail to understand that the statutory
provisions for exception from discharge set forth in Bankruptcy
Code section 523(a)(1) are set forth in the disjunctive and
delineate increasingly broader exceptions from discharge for
increasingly more egregious taxpayer behavior.7
7 Bankruptcy Code sec. 523(a)(1) sets forth four different,
disjunctive provisions for exception from discharge, any one of
which will disqualify taxes from bankruptcy discharge, as
follows: (1) Taxes for which a return was due within a 3-year
period lookback before the date the bankruptcy petition was
filed, Bankruptcy Code sec. 523(a)(1)(A), cross-referencing
Bankruptcy Code sec. 507(a)(7); (2) taxes for which a return
generally was due earlier than the 3-year lookback period before
the date the bankruptcy petition was filed but for which a return
was filed late and within a 2-year lookback period before the
bankruptcy petition was filed, Bankruptcy Code sec.
523(a)(1)(B)(ii); (3) taxes for which a return was never filed,
Bankruptcy Code sec. 523(a)(1)(B)(i); or (4) taxes for which a
fraudulent return was filed or with respect to which a debtor in
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Last modified: March 27, 2008