Court Opinion

ID: 4500903
Source: CourtListenerOpinion
Date Created: 2020-01-23 20:00:37.817151+00
Date Added: 2024-06-11T12:49:23.255640
License: Public Domain

Case: 18-14922   Date Filed: 01/23/2020   Page: 1 of 21

                                                                     [PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 18-14922
                       ________________________

         D.C. Docket Nos. 5:18-cv-00341-JSM; 6:15-bkc-08569-KSJ

In Re: JOHN ROBERT SHEK,

                                                   Debtor.
__________________________________________________________________

MASSACHUSETTS DEPARTMENT OF REVENUE,
                                                          Defendant-Appellant,

                                 versus

JOHN ROBERT SHEK,
                                                               Plaintiff-Appellee.

                       ________________________

                Appeal from the United States District Court
                    for the Middle District of Florida
                      ________________________

                            (January 23, 2020)
               Case: 18-14922      Date Filed: 01/23/2020     Page: 2 of 21

Before GRANT and ANDERSON, Circuit Judges, and ROYAL, ∗ District Judge.

ANDERSON, Circuit Judge:

       The Massachusetts Department of Revenue (“DOR”) appeals the district

court’s conclusion that John Shek’s Massachusetts income tax return debt is

dischargeable in bankruptcy. Because, under the circumstances of this case, we

conclude that the Bankruptcy Code permits discharge of Shek’s late-filed tax

return debt, we affirm.

                                             I.

       John Shek filed his 2008 state income tax return in November 2009, seven

months late. He owed the government of Massachusetts $11,489, which remained

unpaid.

       Six years later, Shek filed for Chapter 7 bankruptcy in Florida. He received

an order of discharge in January 2016, wiping his slate clean of previously held

debts. DOR then resumed its collection activities on Shek’s outstanding tax debt.

Shek filed a motion to reopen his bankruptcy case to determine whether the order

of discharge encompassed his tax liability to Massachusetts. The parties cross-

moved for summary judgment, and the bankruptcy court held that his late-filed tax

return was dischargeable in bankruptcy.

∗ Honorable Ashley C. Royal, United States District Judge for the Middle District of Georgia,
sitting by designation.
                                             2
               Case: 18-14922        Date Filed: 01/23/2020      Page: 3 of 21

       The parties filed a joint motion agreeing to a stipulated final order and

judgment to facilitate DOR’s appeal of the central issue in the dispute—whether

Shek’s late-filed tax return debt was dischargeable under the Bankruptcy Code.

DOR appealed to the district court, which agreed with the bankruptcy court. 1 This

appeal followed. 2

                                               II.

       The Bankruptcy Code provides for discharge of most of an individual

debtor’s debts. This discharge voids judgments determining a debtor’s personal

liability with respect to discharged debts and enjoins commencement or

continuation of actions to collect those debts. 11 U.S.C. § 524. The Code tends to

favor discharges, in accordance with Congress’ purpose in enacting the Code: “to

grant a fresh start to the honest but unfortunate debtor.” Marrama v. Citizens Bank

of Mass., 549 U.S. 365, 367 (2007) (internal citations and quotations omitted).

       But Congress exempts certain debts from discharge. These non-

dischargeable debts are set forth in 11 U.S.C. § 523. Section 523(a) specifically

carves out certain kinds of tax debts from the Code’s dischargeability rule, stating:

             (a) A discharge under section 727 . . . of this title does not
       discharge an individual debtor from any debt—
1
 The relevant facts are not in dispute. We review the district and bankruptcy court’s conclusions
of law de novo. In re Hood, 727 F.3d 1360, 1363 (11th Cir. 2013).
2
 The Court notes the contributions the amicus curiae, Professor John Pottow of the University of
Michigan Law School. His briefing and oral argument were very helpful in untangling this
corner of bankruptcy law.
                                               3
                Case: 18-14922       Date Filed: 01/23/2020       Page: 4 of 21

                     (1) for a tax or a customs duty— . . .
                             (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. 3
In essence, the statute provides that a tax debt is not dischargeable if a return (1)

was not filed at all, or (2) was filed after the date on which the return was due, and

that filing was within two years before the debtor’s bankruptcy was filed. 4

       Before 2005, neither the Bankruptcy Code nor the Internal Revenue Code

defined “return.” Courts adopted a test developed in the Tax Court known as the

Beard test (first fleshed out in Beard v. Comm’r of Internal Revenue, 82 T.C. 766

(1984), aff’d, 793 F.2d 139 (6th Cir. 1986)) to determine whether a document

analogous to a Form 1040 constitutes a “return” for purposes of dischargeability

under the Code.5 The Beard test established four requirements a putative return

must satisfy to constitute a “return”: (1) it must purport to be a return; (2) it must

3
   Although not relevant here, § 523 also excludes from dischargeability debtors who file
fraudulent returns. § 523(a)(1)(C). In addition, to discharge a tax debt, the tax return must have
been due at least three years before the bankruptcy petition was filed. § 523(a)(7)(B).
4
  Shek filed his bankruptcy petition more than five years after he filed his late return, so
§ 523(a)(1)(B)(ii) would not prevent discharge.
5
   The Beard test builds upon Supreme Court precedent stating that, for some purposes, a
document purporting to be a return need not strictly comply with the Internal Revenue Code’s
requirements, so long as it works, in essence, as a “constructive return.” See Zellerbach Paper
Co. v. Helvering, 293 U.S. 172, 180 (1934) (“Perfect accuracy or completeness is not necessary
[if a filing] purports to be a return, is sworn to as such, and evinces an honest and genuine
endeavor to satisfy the law.”).
                                                4
                Case: 18-14922        Date Filed: 01/23/2020       Page: 5 of 21

be executed under penalty of perjury; (3) it must contain sufficient data to allow

calculation of tax; and (4) it must represent an honest and reasonable attempt to

satisfy the requirements of the tax law. See In re Justice, 817 F.3d 738, 741 (11th

Cir. 2019).

       In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer

Protection Act (“BAPCPA”), which for the first time added a definition of “return”

to the Code. The definition states:

       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 similar
       State or local law.

11 U.S.C. 523(a)(*).6

       Note that this definition refers in part to §§ 6020(a) and (b) of the Internal

Revenue Code. These sections govern “substitutes for returns.” When the IRS

discovers that a tax return is missing, it can draft a return itself with the taxpayer’s

cooperation under 26 U.S.C. § 6020(a). This procedure is almost never used and

results in a “minute” number of returns, according to the IRS. See Justice, 817

6
  This definition of “return” appears at the end of subsection (a) of § 523. Because it has no
numbered or lettered subsection designation of its own, courts often cite to it as § 523(a)(*) and
refer to it as the “hanging paragraph” or “flush language.” See, e.g., Justice, 817 F.3d at 742 n.4;
In re Mallo, 774 F.3d 1313, 1318 (10th Cir. 2014).
                                                 5
               Case: 18-14922      Date Filed: 01/23/2020     Page: 6 of 21
F.3d at 743 n.5; In re Fahey, 779 F.3d 1, 6 (1st Cir. 2015). The IRS can also file a

substitute for return without the taxpayer’s cooperation under 26 U.S.C. § 6020(b).

The hanging paragraph thus makes clear that § 6020(a) returns constitute “returns”

for purposes of dischargeability, while § 6020(b) returns do not, resolving a pre-

2005 dispute between bankruptcy courts as to the proper categorization of

§§ 6020(a) and (b) returns. 7 Shek did not file his return under § 6020, but the

inclusion of § 6020 returns in the hanging paragraph will affect our interpretation

of the provision, as indicated below.

       The dispute in this case concerns the first sentence of the hanging

paragraph’s definition of “return”, which provides that a “return” for purposes of

§ 523 means “a return that satisfies the requirements of applicable nonbankruptcy

law (including applicable filing requirements).” DOR raises two arguments in an

attempt to demonstrate that Shek’s putative return, which was filed seven months

late, does not qualify as a “return” under § 523(a)(*). First, DOR argues that the

return did not satisfy “applicable filing requirements” because it did not comply

with Massachusetts’ April 15th tax return deadline. Second, and relatedly, DOR

argues that the “applicable nonbankruptcy law” here is Massachusetts law, and that

7
  Compare In re Ridgway, 322 B.R. 19, 37 (Bankr. D. Conn. 2005) (holding that a § 6020(b)
return is a “return” under § 523), with In re Lowrie, 162 B.R. 864, 866 (Bankr. D. Nev. 1994)
(holding that a § 6020(b) return is not a “return” under § 523).
                                             6
               Case: 18-14922      Date Filed: 01/23/2020     Page: 7 of 21

Massachusetts defines a “return” by reference to its timeliness. We address each

argument in turn.

                                            III.

       DOR’s first argument is that the phrase “applicable filing requirements”

includes the relevant temporal deadline for filing a tax return. If a taxpayer does

not timely file his or her return, so the argument goes, it has not complied with all

“applicable filing requirements.” Therefore, DOR argues, an untimely return is not

a “return” for purposes of § 523. This court has termed this approach the “one-

day-late rule” because it would prohibit “discharge of a tax debt with respect to

which a return was filed even one day late.” Justice, 817 F.3d at 743. 8

       DOR’s syllogism—a return must comply with “applicable filing

requirements,” and a filing deadline is an “applicable filing requirement,” so a

return that does not meet its deadline has not complied with “applicable filing

requirements”—has some force to it. All three of our sister circuits to have

considered this question have held that the plain language of the hanging paragraph

requires DOR’s interpretation. See Fahey, 779 F.3d at 4 (“So the question is

whether timely filing is a ‘filing requirement’ under Massachusetts law. The

answer is plainly yes.”); Mallo, 774 F.3d at 1327 (“[T]he plain and unambiguous

language of § 523(a) excludes from the definition of ‘return’ all late-filed tax

8
  In Justice, we expressly did not decide whether the “one-day-late rule” was a correct or an
incorrect interpretation of the statute. Id.
                                             7
              Case: 18-14922     Date Filed: 01/23/2020    Page: 8 of 21

forms, except for those prepared with the assistance of the IRS under § 6020(a).”);

In re McCoy, 666 F.3d 924, 932 (5th Cir. 2012) (“Unless it is filed under a ‘safe

harbor’ provision similar to § 6020(a), a state income tax return that is filed late

under the applicable nonbankruptcy state law is not a ‘return’ for bankruptcy

discharge purposes under § 523(a).”).

                                          A.

      We do not, however, agree that the phrase “applicable filing requirements”

unambiguously includes filing deadlines. Of course, it is plausible that it means

filing requirements that are relevant to the taxpayer filing the return at issue. Such

an interpretation would encompass requirements relating to the content of the

return, the location it must be filed, and the time by which it must be filed. This is

the interpretation implicitly adopted by our sister circuits. And it may well be the

best reading of the language “applicable filing requirements” when considered in

isolation.

      But it is not obvious that this is the interpretation Congress intended in

drafting the hanging paragraph. Notably, this understanding of the word

“applicable” would add little to the phrase “applicable filing requirements” that the

phrase “filing requirements,” standing alone, would not already encompass. We

must strive, if possible, to give meaning to every word of the Code. See, e.g.,

United States v. Menasche, 348 U.S. 528, 538-39, 75 S. Ct. 513 (1955). This

                                           8
                Case: 18-14922       Date Filed: 01/23/2020       Page: 9 of 21

means we must look for an interpretation of “applicable” that distinguishes the set

of “applicable filing requirements” from the set of all “filing requirements.” Any

interpretation that does not account for this word risks rendering it superfluous.9

       The amicus proffers an interpretation of “applicable” that would distinguish

between “applicable filing requirements” and other filing requirements. He notes

that the Supreme Court, in interpreting a different section of the Code, has

described “applicable” as meaning something different from “all”; it requires an

analysis of context and typically means “appropriate, relevant, suitable or fit.”

Ransom v. FIA Card Servs., N.A., 562 U.S. 61, 69-70 (2011) (citing Webster’s

Third New International Dictionary 105 (2002); New Oxford American Dictionary

74 (2d ed. 2005); 1 Oxford English Dictionary 575 (2d ed. 1989)). The amicus

argues that the “appropriate, relevant, suitable or fit” filing requirements are those

concerning what constitutes a return. For example, “applicable” filing

requirements could refer to considerations like a return’s form and contents—

aspects of the putative return that have a material bearing on whether or not it can

reasonably be described as a “return”—but not to more tangential considerations,

like whether it was properly stapled in the upper-left corner, or whether it was filed

by the required date. This approach makes common sense; in a definition of what
9
  For example, the Tenth Circuit in Mallo provided a dictionary definition of “applicable”
(“[c]apable of being applied; relevant or appropriate”), but went on to define the phrase
“applicable filing requirement” as “something that must be done with respect to filing a tax
return.” 774 F.3d at 1321. It is not clear that this definition of “applicable filing requirement”
adequately grapples with the meaning of the word “applicable.”
                                                9
               Case: 18-14922       Date Filed: 01/23/2020       Page: 10 of 21

constitutes a “return,” it makes sense that the term “applicable” would relate to

matters that are relevant to the determination of whether the document at issue can

reasonably be deemed a “return.”

       We are, therefore, presented with two plausible constructions of the phrase

“applicable filing requirements” when considered without context: (1) those filing

requirements that apply to a given taxpayer, or (2) those filing requirements that

are “relevant” or “appropriate” to the task of defining a “return”—that is, those that

deal with what a return is. Cf. Fahey, 779 F.3d at 5 (agreeing that “applicable

filing requirements” “may acquire vagueness at the outer boundaries of its possible

application” before concluding that there is no “room for reasonable argument”

that a filing deadline “is somehow not a ‘filing requirement’”). Statutory context,

however, makes clear that only the latter interpretation accords with § 523 as a

whole. 10

                                               B.

       Statutory provisions are not written in isolation and do not operate in

isolation, so we cannot read them in isolation. The plain meaning of a statutory

provision derives not only from the “particular statutory language at issue,” but

also “the language and design of the statute as a whole.” K Mart Corp. v. Cartier,

10
  Actually, we believe that this second plausible interpretation of the term “applicable” includes
a subset of the first—i.e. those filing requirements that apply to a given taxpayer that are
“relevant” or “appropriate” to the task of defining a return.
                                               10
               Case: 18-14922      Date Filed: 01/23/2020       Page: 11 of 21

Inc., 486 U.S. 281, 291 (1988). As one prominent treatise on statutory

interpretation puts it, “[c]ontext is a primary determinant of meaning,” and “[t]he

entirety of the document thus provides the context for each of its parts.” Antonin

Scalia & Bryan Garner, Reading Law: The Interpretation of Legal Texts (“Reading

Law”) 167 (2012). We must interpret statutes “harmoniously,” reconciling

separate sections so that they are compatible and not contradictory. Reading Law

at 180.

       Most importantly for present purposes, we must attempt to give effect to

every word or provision in § 523. See Hibbs v. Winn, 542 U.S. 88, 101, 124 S. Ct.
2276 (2004) (“[A] statute should be construed so that effect is given to all its

provisions, so that no part will be inoperative or superfluous, void or

insignificant.”); Reading Law at 174. “Because legal drafters should not include

words that have no effect, courts avoid a reading that renders some words

altogether redundant.” Reading Law at 176. 11 This surplusage canon obliges us,

whenever possible, to disfavor an interpretation when that interpretation would

render a “clause, sentence, or word . . . superfluous, void, or insignificant.” TRW

Inc. v. Andrews, 534 U.S. 19, 31 (quoting Duncan v. Walker, 533 U.S. 167, 174

(2001)).

11
   See also id. (“If a provision is susceptible of (1) a meaning that gives it an effect already
achieved by another provision, or that deprives another provision of all independent effect, and
(2) another meaning that leaves both provisions with some independent operation, the latter
should be preferred.”).
                                              11
              Case: 18-14922     Date Filed: 01/23/2020    Page: 12 of 21

      The most telling evidence that DOR’s reading of the hanging paragraph is

incorrect is its proposed interpretation’s effect on § 523(a)(1)(B)(ii), which would

violate the principles described above. When Congress in 2005 added the hanging

paragraph, it left § 523(a)(1)(B)(ii) unchanged, and left unchanged its clear

provision that a late-filed return can qualify for discharge if the return is filed more

than two years before the bankruptcy. Section 523(a)(1)(B)(ii) excludes from

dischargeability a tax debt for which a return “was filed or given after the date on

which such return . . . was last due, . . . and after two years before the date of the

filing of the [bankruptcy] petition.” In other words, a tax debt stemming from a

late return cannot be discharged if the debtor’s bankruptcy occurred within two

years of the date he filed the return. By negative implication, such a debt can be

discharged if there is a delay of at least two years between the filing of the return

and the filing of the petition for bankruptcy.

      The one-day-late approach would render § 523(a)(1)(B)(ii) a near nullity.

Recall that DOR’s interpretation of “applicable filing requirements” would deem

all late-filed returns not actual returns for purposes of § 523. But § 523(a)(1)(B)(ii)

explicitly permits the discharge of at least some late-filed returns. There is a clear

conflict between DOR’s interpretation of the hanging paragraph and

§ 523(a)(1)(B)(ii). An untimely (putative) return would apparently never

                                           12
              Case: 18-14922      Date Filed: 01/23/2020      Page: 13 of 21

constitute a “return” under § 523(a)(1)(B)(ii). What, then, is the purpose of the

dischargeability exclusion in § 523(a)(1)(B)(ii)?

       DOR and the one-day-late approach reply that there still remains a role for

§ 523(a)(1)(B)(ii)—albeit a small one. I.R.C. § 6020(a) returns (which are late-

filed returns jointly prepared by the IRS and the delinquent taxpayer) are explicitly

defined as § 523 “returns” in the hanging paragraph. So are returns governed by

“similar State or local law” (that is, returns jointly prepared by a state tax agency

and the taxpayer under a scheme similar to that of § 6020(a)), or returns prepared

pursuant to a “written stipulation to a judgment or a final order entered by a

nonbankruptcy tribunal.” These categories of “returns,” DOR argues, would be

dischargeable under § 523, unless barred from discharge by § 523(a)(1)(B)(ii) if a

taxpayer’s bankruptcy petition was filed within two years of the date these

“returns” were filed. Thus, according to DOR’s argument, § 523(a)(1)(B)(ii) is not

surplusage because it still bars discharge of some returns. Our sister circuits have

found this argument persuasive. See Fahey, 779 F.3d at 6; Mallo, 774 F.3d at

1323-24.12

       We do not agree. While the IRS has not appeared in this case, it filed its

views on this matter in Justice, 817 F.3d at 743 n.5, and in Fahey, 779 F.3d at 6,

where it noted that only a “tiny minority” or a “minute” number of returns were

12
   McCoy did not address the conflict between the hanging paragraph and § 523(a)(1)(B)(ii) at
all. See n.14 infra.
                                             13
              Case: 18-14922      Date Filed: 01/23/2020    Page: 14 of 21

ever filed under § 6020(a). Given the atypical nature of a § 6020(a) return, this

makes sense. But again, the Supreme Court has instructed us that the surplusage

canon does not only apply when a potential interpretation would leave a statutory

provision with no role; it also applies when an interpretation would render a

“clause, sentence, or word . . . superfluous, void, or insignificant.” TRW, 534 U.S.

at 31, 122 S. Ct. at 449 (internal quotations and citations omitted; emphasis added).

      DOR’s proposed interpretation would render the dischargeability limitation

in § 523(a)(1)(B)(ii) insignificant. Section 523(a)(1)(B)(ii) would only limit

discharge of returns filed under § 6020(a) or a related state or local provision.13

And it would only bar discharge of such returns of taxpayers with respect to whom

bankruptcy was filed within two years of the filing of the late return. Section

523(a)(1)(B)(ii) would therefore operate only on a subset of an already “minute”

set of tax returns. In all other circumstances, it would be completely irrelevant,

despite its facially broad language. Relegating § 523(a)(1)(B)(ii) to insignificance

would run counter to the Supreme Court’s consistent refusal to construe statutes

“in a manner that renders [them] entirely superfluous in all but the most unusual

13
  It is not apparent how many states (or local governments) have mechanisms equivalent to §
6020(a). Massachusetts does not. See Perkins v. Mass. Dep’t of Revenue, 507 B.R. 45, 53 n.6
(D. Mass. 2014).
                                            14
               Case: 18-14922        Date Filed: 01/23/2020        Page: 15 of 21

circumstances.” Roberts v. Sea-Land Servs, Inc., 566 U.S. 93, 103, 132 S. Ct.
1350, 1358 (2012). 14

       We think it is deeply implausible that Congress intended § 523(a)(1)(B)(ii)

to apply only in such a handful of cases despite no such limitation appearing in that

provision itself. It would be a bizarre statute that set forth a broad exclusion for

discharge of tax return debts, but limited the application of that exclusion via an

opaque and narrow definition of the word “return.” It would be even stranger to

enact the broad exclusion in § 523(a)(1)(B)(ii), only to later amend the statute, not

by changing the text of § 523(a)(1)(B)(ii) itself, but with a different definitional

provision that would cabin § 523(a)(1)(B)(ii) into applying only to the “minute”

number of § 6020(a) returns. If Congress had intended this result, it could have

achieved it in a much less abstruse manner simply by stating in § 523(a)(1)(B)(ii)

itself that that section applied only to § 6020(a) returns.15

14
   We do not find Fahey, Mallo, or McCoy persuasive. In Fahey, the First Circuit discounted the
force of the surplusage canon because there remained at least some role for § 523(a)(1)(B)(ii).
See 779 F.3d at 6 (“While section 6020(a) may only apply in a small minority of cases, the fact
that a late filed section 6020(a) return can still qualify as a “return” for section 523(a) purposes
means that the two-year provision still has a role to play if the hanging paragraph’s plain
meaning controls.” (emphasis added)). Accord Mallo, 774 F.3d at 1324. Neither case addresses
the fact that the Supreme Court in TRW and Roberts has held that the surplusage canon operates
not only when a potential interpretation would leave a statutory provision with no role, but also
when it would render the provision insignificant, or operative in only the most unusual cases.
Similarly, the Fifth Circuit’s decision in McCoy is not persuasive; it does not even recognize the
conflict between its interpretation of § 523(a)(*) and the clear provision in § 523(a)(1)(B)(ii) that
at least some late-filed returns can qualify for discharge.
15
  See also TRW, 534 U.S. at 31, 122 S. Ct. at 449 (rejecting a proposed interpretation because
under that reading “a rule nowhere contained in the text of § 1681p would do the bulk of that
                                                 15
               Case: 18-14922       Date Filed: 01/23/2020      Page: 16 of 21

       Our understanding of how Congress drafts statutes also accords with the

Supreme Court’s instructions that we attempt, where possible, to interpret the

Bankruptcy Code post-BAPCPA harmoniously with pre-BAPCPA practice. See

Hamilton v. Lanning, 560 U.S. 505, 517, 130 S. Ct. 2464, 2473 (2010) (“Pre-

BAPCPA bankruptcy practice is telling because we will not read the Bankruptcy

Code to erode past bankruptcy practice absent a clear indication that Congress

intended such a departure.”). We do not think it is likely that Congress would

significantly curtail the set of dischargeable returns so starkly without a clearer

indication that it was indeed intending to do so.

       Lastly, we note that our interpretation of the hanging paragraph is in

harmony with the principle that “exceptions to discharge should be confined to

those plainly expressed.” Kawaauhau v. Geiger, 523 U.S. 57, 58, 118 S. Ct. 974,

977 (1998). In addition, we have noted in the past that we should, where possible,

construe exceptions to discharge “in favor of the debtor, and recognize that the

reasons for denying a discharge must be real and substantial, not merely technical

and conjectural.” In re Miller, 39 F.3d 301, 304 (11th Cir. 1994) (internal citations

and quotations omitted).

provision’s work, while a proviso accounting for more than half of that text would lie dormant in
all but the most unlikely situations”).
                                               16
                 Case: 18-14922     Date Filed: 01/23/2020      Page: 17 of 21

                                              IV.

       DOR raises a second argument: that, as applied to Shek’s return, the phrase

“applicable nonbankruptcy law” refers to Massachusetts tax law, and that

Massachusetts tax law defines “return” in part by reference to whether a putative

return is timely filed. The argument proceeds as follows: (1) the applicable

nonbankruptcy law is Massachusetts’ definition of a “return”; (2) Massachusetts

regulation 830 C.M.R. 62C.26.1(2) defines “return” as “a taxpayer’s signed

declaration of the tax due, if any, properly completed by the taxpayer or the

taxpayer’s representative on a form prescribed by the Commissioner and duly filed

with the Commissioner”; (3) the phrase “duly filed” encompasses a temporal

requirement, so that a document is not “duly filed” unless it is filed on time; (4)

therefore, the “applicable nonbankruptcy law” defines a “return” as, in part, a

timely filing.

       This argument fails at step 3.16 The parties dispute whether “duly filed”

does actually incorporate a timeliness requirement. DOR argues that “duly filed”

means “filed” “in a due manner, time, or degree,” citing Webster’s Third (1961

ed.) (emphasis added), while the amicus points to Black’s Law Dictionary, which

instead defines “duly” as “[i]n a proper manner; in accordance with legal

16
   As noted in Part V n.17 infra, we need not in this opinion define the full scope or boundaries
of “applicable nonbankruptcy law.”
                                               17
             Case: 18-14922     Date Filed: 01/23/2020    Page: 18 of 21

requirements,” and argues that the traditional legal adverb for “time sensitivity”

would instead be “timely.”

      This seems to be a close question, and the phrase “duly filed,” standing

alone, would likely be at least ambiguous. But the remainder of Massachusetts law

undermines DOR’s position, making clear that Massachusetts still treats late-filed

returns as, definitionally speaking, “returns.” For example, Massachusetts has a

section in its tax code concerning late-filed returns (Ch. 62C, § 33) and a section

concerning a taxpayer’s complete failure to file a return (Ch. 62C, § 34). If

Massachusetts did in fact define a return as, in part, a timely filing, it would only

need the latter section, as anyone who filed a return out of time would not,

definitionally speaking, have filed a return at all. In the same vein, the section of

the code concerning late-filed returns speaks of compounding penalties on a late

filer “until the return is filed.” See Mass. Gen. Laws Ch. 62C, § 33(a). If

Massachusetts defined returns by virtue of timeliness, this section would need to

instead state “until the putative return is filed.” And, for a third example,

Massachusetts regulations require the Commissioner to send a written notification

to a person who has not filed his return “requesting that the taxpayer file a proper

return.” 830 C.M.R. 62C.26.1(13)(c)(1). If a filing could only be a “return” if it

met the statutory deadline, the dilatory taxpayer could never file a “proper return.”

                                          18
             Case: 18-14922      Date Filed: 01/23/2020    Page: 19 of 21

      DOR responds that the hanging paragraph’s definition of “return” only

applies “for purposes of this subsection,” 11 U.S.C. § 523(a)(*), and we must

therefore construe the definition of “return” “for purposes of evaluating

dischargeability, not for purposes of tax law.” This argument makes no sense. The

DOR argument is that our statutory term “applicable nonbankruptcy law”

incorporates the definition of a tax return under Massachusetts tax law. DOR

cannot, in the same breath, disavow what Massachusetts tax law actually provides.

      We reject DOR’s argument that a late-filed return cannot be a “return” under

Massachusetts tax law; we conclude that, considering the “duly filed” provision in

the context of the whole of the relevant Massachusetts statutes, Massachusetts does

not limit its definition of the term “return” only to timely filed returns.

      Therefore, we also reject this second argument of DOR.

                                           V.

      Having determined that neither the hanging paragraph nor Massachusetts

law defines a “return” by reference to a filing’s timeliness, we are left to

determine—with respect to Shek’s Massachusetts income tax return at issue here—

whether to apply the Beard test’s definition of a “return” or the Massachusetts

                                           19
                 Case: 18-14922      Date Filed: 01/23/2020       Page: 20 of 21

definition. But because the outcome is the same either way, we need not decide

that issue. 17

       If we were to apply Massachusetts’ definition of a “return”—which we

concluded above does not incorporate a timeliness requirement—we would find no

basis for holding that Shek’s return is not a “return.” Massachusetts regulation 830
C.M.R. 62C.26.1(2) defines “return” as “a taxpayer’s signed declaration of the tax

due, if any, properly completed by the taxpayer or the taxpayer’s representative on

a form prescribed by the Commissioner and duly filed with the Commissioner.”

There is nothing in the record indicating that any of these requirements has not

been met.

       And if we were to apply the Beard test’s definition of a return, we would

also conclude that Shek’s return is a “return.” This is because, pursuant to a

stipulation of the parties in the bankruptcy court, DOR conceded that Shek

satisfied all four prongs of the Beard test, and that Shek’s tax return debt would be

discharged.

17
   In Justice, we noted that both parties to that case, and all courts to have considered the issue,
agreed that the phrase “applicable nonbankruptcy law” incorporated the Beard test. 817 F.3d at
743. But see Fahey, 779 F.3d at 10, and Mallo, 774 F.3d at 1325 (both suggesting that specific
filing requirements would trump at least any conflicting application of the Beard test). In any
event, Justice involved a federal income tax return, and therefore did not address the application
of state law in a case involving a state income tax return, as here. As noted in this section, we
need not in this case decide whether “applicable nonbankruptcy law,” as applied in this case,
means only relevant Massachusetts law, or only the Beard test, or some combination thereof.
                                                20
               Case: 18-14922      Date Filed: 01/23/2020       Page: 21 of 21

       So under either test, Shek’s return is a return for purposes of § 523. We hold

that the bankruptcy court’s discharge included Shek’s tax return debt.

                                              VI.

       We conclude that § 523 does not incorporate a mandatory precondition that

a tax return must be timely filed to be dischargeable. 18 And we conclude that

under Massachusetts tax law, a late-filed tax return does not automatically cease

having the status of a “return” merely because it was filed late. Whether or not §

523 incorporates the Beard test or Massachusetts state law, the bankruptcy court’s

discharge order included Shek’s tax debt. The order of the district court is

therefore

        AFFIRMED.

18
  However, the timing of the filing of the return is relevant under the Beard test. See Justice,
817 F.3d at 744.
                                              21