Equitable Tolling Effect of Prior Bankruptcy Leads to 8 Years of Nondischargeable Taxes In Rader v. IRS, the debtor filed a Chapter 13 bankruptcy

Equitable Tolling Effect of Prior Bankruptcy Leads to 8 Years of Nondischargeable Taxes In Rader v. IRS, the debtor filed a Chapter 13 bankruptcy

petition on March 11, 2014. However, the debtor had filed an earlier case on May 11,

2011, which was dismissed on November 7, 2013. Under Section 523(a)(1)(B)(ii) of the Bankruptcy Code, the taxes owed under late-filed returns are nondischargeable if the returns were filed after two years before the bankruptcy.

The U.S. Bankruptcy Court for the Middle District of Tennessee concluded that the debtor’s first bankruptcy equitably tolled the so-called “two-year lookback period” of Section 523(a)(1)(B)(ii), such that any late returns filed after September 2009 rendered the taxes owed thereunder nondischargeable.

Since the debtor filed the returns for tax years 2002-2009 on March 15, 2011, and the return for tax year 2010 no earlier than April 2, 2012, the taxes owed on all of those returns was held nondischargeable.