Abstract
This Note examines the circuit split over the dischargeability of tax debts tied to late-filed returns, which has led to inconsistent bankruptcy outcomes and inequitable treatment of debtors across jurisdictions. Some courts, adopting the strict “one-day-late” rule, hold that any tax return filed even a single day past its deadline is not a “return” for bankruptcy discharge purposes, permanently barring relief. Others apply a more flexible standard grounded in the Beard test, considering a debtor’s good-faith compliance efforts. This inconsistency contradicts the fresh start principle of bankruptcy law, disproportionately harms low-income debtors, and fails to serve the government’s tax collection interests. This Note argues that Congress should amend 11 U.S.C. § 523(a)(1)(B) to codify the Beard test and restore the effectiveness of the two-year rule, ensuring that bankruptcy law does not impose lifelong financial penalties for minor procedural missteps. Alternatively, the Supreme Court should establish a uniform standard, or the IRS should issue administrative guidance clarifying that a late-filed return remains valid for tax assessment and discharge purposes. A clear, consistent, and fair approach is necessary to resolve this issue and restore uniformity, predictability, and economic rationality to tax dischargeability in bankruptcy.
Recommended Citation
Elizabeth Tsai,
The Taxing Ambiguity: Defining "Return" in Bankruptcy Dischargeability Cases,
74 Clev. St. L. Rev.
563
(2026)
available at https://engagedscholarship.csuohio.edu/clevstlrev/vol74/iss2/10
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