352 F.3d 902 (4th Cir. 2003), 02-2417, In re Moroney

Docket Nº:02-2417
Citation:352 F.3d 902
Party Name:In re Moroney
Case Date:December 19, 2003
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 902

352 F.3d 902 (4th Cir. 2003)

In Re: Michael J. MORONEY, Debtor.

Michael J. Moroney Plaintiff-Appellant,


United States of America; Internal Revenue Service, Defendants-Appellees.

No. 02-2417.

United States Court of Appeals, Fourth Circuit

December 19, 2003

Argued: Oct. 30, 2003.

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Marla Lynn Howell, Decaro & Howell, P.C., Upper Marlboro, Maryland, for Appellant.

Kenneth L. Greene, Tax Division, United States Department of Justice, Washington, D.C., for Appellees.

Thomas M. DeCaro, Jr., Decaro & Howell, P.C., Upper Marlboro, Maryland, for Appellant.

Eileen J. O'Connor, Assistant Attorney General, Paul J. McNulty, United States Attorney, Ellen Page DelSole, Tax Division, United States Department of Justice, Washington, D.C., for Appellees.

Before WILKINSON and TRAXLER, Circuit Judges, and ROBERT E. PAYNE, United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge TRAXLER and Judge PAYNE joined.


WILKINSON, Circuit Judge.

The question in this case is whether delinquent personal income tax filings, submitted years after the Internal Revenue Service has already prepared its own assessments, constitute "returns" for purposes of the Bankruptcy Code. A debtor in bankruptcy is permitted to discharge personal income tax liabilities, but only if he has filed a return with the IRS reporting those tax liabilities. In the present case, because the debtor's eventual submissions were neither honest nor reasonable attempts to comply with the tax laws, both the bankruptcy and district courts found that no returns had ever been filed. We affirm that judgment.


The basic facts in this case are not in dispute. Debtor Michael J. Moroney did not submit timely personal income tax filings for either the 1990 or 1992 tax years. Moroney never offered any evidence to the bankruptcy or district courts to explain his late filing. When asked before the district court, Moroney's attorney said that Moroney

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"just didn't get around to filing his tax returns," because he had been "extremely busy" with his job. Filing tax statements "was just something that got pushed to the back burner."

As a result of Moroney's failure to file, in 1994 the IRS began to examine Moroney's income tax liabilities. The IRS then independently prepared "Substitutes for Returns" ("SFRs") to determine the amounts that Moroney owed for the 1990 and 1992 tax years. On the basis of the SFRs, the IRS assessed taxes against Moroney of $23,197.00 for the 1990 tax year and $45,567.00 for the 1992 tax year.

At some point thereafter, Moroney submitted income tax statements for 1990 and 1992. The IRS contends that Moroney did not file his forms until November 1998. Moroney, however, points to communications between his accountants and the IRS that indicate the forms were filed two years earlier in November 1996. Regardless, Moroney concedes that his forms postdated by at least two years the SFRs prepared by the IRS, and that his forms postdated the original filing deadlines by at least four and six years, respectively. Because Moroney's forms reported tax liabilities that were less than the IRS's assessments, the IRS lowered Moroney's unpaid assessments. Specifically, the IRS abated $8,330 of the 1990 tax year assessment and $14,980 of the 1992 tax year assessment.

On March 23, 2000, Moroney filed a voluntary petition for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia. Moroney listed his 1990 and 1992 tax liabilities as nonpriority claims, subject to discharge in a Chapter 7 proceeding. However, the IRS notified Moroney that, given his delinquency in filing for those years, it did not consider his tax liabilities subject to discharge. The IRS and Moroney filed cross-motions for summary judgment before the bankruptcy court, seeking a determination of whether Moroney's tax liabilities were excepted from discharge under Section 523 of the Bankruptcy Code. The bankruptcy court held that...

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