BOSTON BAR ASSOCIATION Consumer Brown Bag 1/8/13 Lunch with the DOR. ALAN ROSENBERG and JEFFREY OGILVIE, MASSACHUSETTS DEPARTMENT OF REVENUE

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1 BOSTON BAR ASSOCIATION Consumer Brown Bag 1/8/13 Lunch with the DOR ALAN ROSENBERG and JEFFREY OGILVIE, MASSACHUSETTS DEPARTMENT OF REVENUE DONALD R. LASSMAN, LAW OFFICE OF DONALD R. LASSMAN, NEEDHAM, MA. 1. Tax liens after bankruptcy a. Tax liens expire in 10 years (plus 30 days) from date of assessment MDOR may, but does not always, seek a judgment to extend life of the debt. To extend the life of the lien, the notice of lien must be re filed. b. Value of property to which lien attaches no equity vs. equity and type of property residence vs. commercial property or personal property. Retirement funds are not exempt Drake v. DOR, 434 BR 11 (Bankr. D. Mass 2010) c. Lien release for no value or value of asset to which lien attaches process and likelihood of success and what metrics does the MDOR use in determining value and lien releases. To initiate lien release, contact local office collector or call Customer Service Bureau d. Motion to determine indebtedness under 506(b) during bankruptcy case if concerned about valuation and lien release. Motion for sale of property should provide lien attaches to proceeds. e. Lien does not attach to after acquired property if underlying tax is discharged in bankruptcy. If tax is not subject to discharge, tax lien will remain in place until it expires and attaches to after acquired property. Olson v. US, 154 BR 276 (Bankr. DND 1993) f. Exempt property remains subject to tax liens for non dischargeable taxes and dischargeable taxes secured by a tax lien (522(c)) g. Should you try and wait out the expiration of the collection statute and tax lien or not. Once collection period has run, timely re filing of tax lien only extends the lien, not the collection period (except as to the property subject to the lien). G.L. c. 62C, 65(ii) 2. Discharge of Taxes and requirement of timely filing a return. a. Little noticed provision added to 523 that requires filing of timely return in order for underlying tax to be subject to discharge (assuming return is not fraudulent) Position of the parties in cases to date Strict interpretation unless tax return is filed on the due date (or the due date as extended by a timely filed request for extension), it is not a return for purposes of 523(a) and the underlying tax cannot be discharged in bankruptcy. McCoy v. Miss. STC, 666 f.3d 924 (5 th Cir. 2012). This is the position adopted by the MDOR. Pending cases in Ma. before Judges Hoffman and Boroff See Gonzalez vs. MDOR, AP and Perkins vs. MDOR, AP Middle ground position Late filed returns constitute returns for purposes of 523(a) provided that they are filed prior to an assessment being made by the taxing authority. See Wogoman vs. Internal Revenue Service, 2011 WL (Bankr. D. Colo. 2011) and see attached Notice from the Office of Chief Counsel of the IRS dated September 2, Debtor friendly interpretation Whether a return meets the requirements of 523(a) depends not on when the return was filed but solely upon whether the return as filed, even if after assessment by the taxing authority, constitutes honest and genuine endeavor to satisfy the law. This test focuses on the form and

2 content of the document the time of filing is not relevant. See In re Martin, 482 B.R. 635 (Bkrtcy. D. Colo. 2012) 3. Priority status of tax claims (time allowing) 11 U.S.C Exceptions to discharge (a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt-- (1) for a tax or a customs duty-- (A) of the kind and for the periods specified in section 507(a)(3) or 507(a)(8) of this title, whether or not a claim for such tax was filed or allowed; (B) with respect to which a return, or equivalent report or notice, if required-- (i) was not filed or given; or (ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; or (C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax; at the end of 523(a) the following unnumbered paragraph was inserted by BAPCPA For purposes of this subsection, the term return means a return that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements). Such term includes a return prepared pursuant to section 6020(a) of the Internal Revenue Code of 1986, or similar State or local law, or a written stipulation to a judgment or a final order entered by a nonbankruptcy tribunal, but does not include a return made pursuant to section 6020(b) of the Internal Revenue Code of 1986, or a similar State or local law.

3 26 USC RETURNS PREPARED FOR OR EXECUTED BY SECRETARY (a) Preparation of return by Secretary If any person shall fail to make a return required by this title or by regulations prescribed thereunder, but shall consent to disclose all information necessary for the preparation thereof, then, and in that case, the Secretary may prepare such return, which, being signed by such person, may be received by the Secretary as the return of such person. (b) Execution of return by Secretary (1) Authority of Secretary to execute return If any person fails to make any return required by any internal revenue law or regulation made thereunder at the time prescribed therefor, or makes, willfully or otherwise, a false or fraudulent return, the Secretary shall make such return from his own knowledge and from such information as he can obtain through testimony or otherwise. (2) Status of returns Any return so made and subscribed by the Secretary shall be prima facie good and sufficient for all legal purposes.

4 507(a)(8) and 523(a)(1) Individual Income Tax Priority Claims Illustrative Timelines 507(a)(8)(A)(i): The Three-Year Rule Example Tax Year Date Income Tax Date Income Tax Date 3 years prior Petition Priority? Dischargeable? Return Filed Return Due to Petition Date Date 3/1/2008 4/15/2008 5/20/2008 5/20/2011 No Yes Example Tax Year Date Income Tax Date 3 years prior Date Income Tax Petition Priority? Dischargeable? Return Due to Petition Date Return Filed Date 4/15/2008 5/20/2008 6/5/2009 5/20/2011 No No 523(a)(1)(B)(ii) Example Tax Year Date Income Tax Date 3 years prior Date Income Tax Petition Priority? Dischargeable? Return Filed to Petition Date Return Due Date 3/1/2008 3/10/2008 4/15/2008 3/10/2011 Yes No 523(a)(1)(A) Example Tax Year Date Income Tax Date 3 years prior Date Income Tax Petition Priority? Dischargeable? Return Due to Petition Date Return Filed Date After Extension 10/15/2008 5/20/2008 9/25/2008 5/20/2011 Yes No 523(a)(1)(A) Example Tax Year Date Income Tax Date 3 years prior Petition 2007 Income Tax Priority? Dischargeable? Return Due to Petition Date Date Return Never Filed 4/15/2008 5/20/2008 5/20/2011 No No 523(a)(1)(B)(i) Example Tax Year Date Income Federal Date 3 years Prior Date Federal Petition Priority? Dischargeable? Tax Return Due Change to Petition Date Change Report Date and Filed Notice Issued Due - Never Filed 4/15/2006 9/20/2006 5/20/2008 9/20/2008 5/20/2011 No No 523(a)(1)(B)(i)

5 507(a)(8)(A)(ii): The 240 Day Assessment Rule Example Tax Year Date Income Tax Date Tax Deficiency Date 240 Days Prior Petition Priority? Dischargeable? Return Filed Assessed to Petition Date Date 4/15/2008 3/10/2010 8/23/2010 5/20/2011 No Yes Example Tax Year 8/16/2010 Date Tax Petition Date Prior Bankruptcy Offer in Offer Petition Priority? Dischargeable Assessed Prior Bankruptcy Stay Lifted Compromise Rejected Date 6/1/2003 7/1/ /31/2007 4/1/2008 9/15/2010 4/11/2011 Yes No 30 days Prior bankruptcy stay Offer in compromise 208 days plus 90 days excluded plus 30 days excluded

6 Contact Information for Taxing Authorities Massachusetts Department of Revenue Bankruptcy Unit John L. Giamattei - Director Chapter 7 and State Law Receiverships Alan Rosenberg - Manager and assignments for benefit of creditors Administrative Assistants: Alan Rosenberg Supervisor Pauline O Malley Leslie Physic - Examiner Jenny Silva Chapter 13 Chapter 11 William F. Connor - Supervisor Steve Kobilaka - Supervisor Shanz Bijan - Examiner Anne Chan - Examiner Gina Carter - Examiner Thomas Hawko - Examiner Maria Fernandes - Examiner James Kelly - Examiner Ruth Peterson - Examiner Jimmy Wong - Examiner Internal Revenue Service Insolvency Reference Guide This listing was prepared by the Insolvency Office on 01/09/2012. Case assignment is subject the change at any time; when in doubt, contact the IRS Centralized Insolvency Office or Group Secretary to determine to whom the case is assigned. Chapter 7 cases listed ( 7A ) are asset cases. Chapter 7 no asset cases are assigned to the IRS Centralized Insolvency Office. Groups 3 & 4 Boston Centralized Insolvency 15 New Sudbury Street P.O. Box 7346 P.O. Box 9112, Stop 20800B Philadelphia, PA Boston, MA Fax Fax Group 3 - Boston Jane Finnegan - Manager Madeline Williams - Secretary John Robblee Dennis McCarthy Court Chapter Letters Court Chapter Letters MA (all locations) 11 A - K MA (all locations) 11 A - Z MA (all locations) 9 A - Z MA (all locations) 9 A Z MA (all locations) 7A A Z Mike Rodkey Julie Sweeney Court Chapter Letters Court Chapter Letters MA (all locations) 13 A - Z MA (all locations) 11 L Z 11 A - Z 9 A - Z MA 01 7 A - Z MA03/04 7 L - O, T- Z

7 Group 4 - Boston Lynn Wast Manager Luis Pina Secretary Gail Allbee Diane Fredette Court Chapter Letters Court Chapter Letters Boston 13 C F, K N, Q-R, T-Z MA (all locations) 13 A - Z Springfield 13 B, D, M O, V Boston 7A Q - R Scott Miller Jeff Reynolds Court Chapter Letters Court Chapter Letters Boston 13 A, B, G F, O, P, S Boston 7 P-Z Boston 7 A-O Gail Irving Court Chapter Letters MA (all locations) 12 A Z Group 3 - Rhode Island 380 Westminster Street Providence, RI Fax# Elena Camardo Court Chapter Letters Springfield/Worcester 13 A - Z Worcester 13 D, M Eugenia Gomes Court Chapter Letters Springfield 13 A, E, I - K, P - Q, T, X Z 7 P Worcester 13 A, J, N, Q, V-Z Valerie Hannigan Court Chapter Letters Springfield 13 C, L, S, U, W Springfield 7 S Worcester 13 B, C, E - I, K - L, P, R - U 7 P, S

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