Berkovich v. State of California Franchise Tax Board (In re Berkovich), — B.R. —, 2020 WL 5910033 (9th Cir. BAP Oct, 2020)
Issue: Is the required “report” which must be filed with the FTB after the IRS adjusts a taxpayer’s return a “return” such that failing to file it renders the tax debt non-dischargeable?
Holding: Yes.
Judge Maureen Tighe, Central District of California
Standard of review. “We review de novo the bankruptcy court’s decision to grant or deny summary judgment.”
Faris, Lafferty, Spraker
Opinion by Robert Faris
The debtor here filed his personal tax returns with the FTB but failed to notify the FTB of adjustments made by the IRS. The debtor argued “that the reports required under RTC section 18622(a) are not ‘returns,’ so his failure to file them did not render his tax debts nondischargeable. He is wrong.” The bankruptcy court ruled that the taxes for those years were not discharged.
The BAP affirmed. “The only question on appeal is whether the report required by RTC section 18622(a) that Mr. Berkovich failed to file is a ‘a return, or equivalent report or notice’ within the meaning of § 523(a)(1)(B).” The BAP said it was based on the language of the RTC code section.
Note: This was a chapter 13. The debt was treated in the plan as unsecured i.e., dischargeable. The plan was confirmed, completed five years later and after that the FTB filed an adversary asking the court to rule that the tax was not discharged.