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Regarding bankruptcy discharge of tax debt, I understand that one is
required to have filed all previously unfiled taxes returns at least 2
years prior (so called "2-Year Rule") to bankruptcy. Nowadays, it
seems, if a taxpayer fails to file his or her own returns, the IRS
will file their own returns on behalf of the taxpayer and, of course,
they assess taxes from these forms. I've heard that recent bankruptcy
court decisions have determined that, in a case like this, the
taxpayer's own filed returns no longer count as legal "returns" under
the bankruptcy code. In other words, if the IRS files their own
returns BEFORE the taxpayer's files his or her own returns, then it is
as if the taxpayer never filed the returns and is ineligible for
discharge under bankruptcy. In other words, the bankruptcy court does
not recognize the taxpayer's own filed returns (because they were
filed AFTER the IRS filed theirs), so the 2-Year Rule was not
fulfilled by the taxpayer, and therefore is ineligible to discharge
the tax debt under bankruptcy.
Has anyone heard of this happening? Has anyone experienced this? Any
comments?
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