Internal Revenue Service v. Smith (In re Smith)

Order Reversing Decision of Bankruptcy Court; Denying Debtor’s Motion to Strike (Dkt. No. 20)

This is an appeal by the Internal Revenue Service (“IRS”) from the Order Granting Debtor Martin Smith’s (“Debt- or”) Request for Summary Judgment and Denying IRS’s Motion for Summary Judgment, entered by the Bankruptcy Court on January 31, 2013, and more fully explicated on the record on January 8, 2013. IRS filed a Notice of Appeal on February 14, 2013, as well as a statement of election to have the United States District Court for the Northern District of California hear its appeal of the Order. See 28 U.S.C. 158(c)(1)(A), Fed. R. Bankr. P. 8001(e), and 9th Cir. B.A.P. L.R. 8001(e)-l. The controversy stems from the treatment, for bankruptcy purposes, of a Form 1040 submitted seven years after it was due and three years after the IRS made an assessment and commenced collection proceedings.

Having carefully reviewed the record of the proceedings in this matter, the legal determinations in the Bankruptcy Court’s decision, and the parties’ briefing, the Court is persuaded the approach used in a majority of the circuits across the United States in their treatment of late-filed tax returns…