Section 523(a)(7)(B) of the Bankruptcy Code discharges a fine “imposed with respect to a transaction or event that occurred” more than three years before filing.
To discharge a fine for the late filing of a tax return, does the three-year period begin running on April 15, the original filing deadline, or Oct. 15, the deadline for filing after an extension request?
District Judge Vince Chhabria of San Francisco reversed the bankruptcy court on Jan. 21 and held that the three-year period starts on the Oct. 15 extension deadline for filing a personal tax return.
Informed by Section 6651(a)(1) of the IRS Code, Judge Chhabria held that the “most natural application of Section 523(a)(7)” leads to the conclusion that the pivotal transaction or event is the failure to file by the Oct. 15 extension deadline.