Brian Power has published an excellent student note, The Courts, Congress, and Tax Debts:  An Analysis of the Discharge of Tax Debts Before and After the Enactment of the Bankruptcy Abuse Prevention and Consumer Protectio Act of 2005, 12 Fordham J. Corp. & Fin. L. 881 (2007). Here is the Conclusion:

Congress should repeal Section 714 of the BAPCPA. By denying discharge to tax debts that arise from returns that violate applicable filing requirements, as well as to tax debts that arise from returns filed under Section 6020(b), Section 714 clearly conflicts with the primary goal of bankruptcy—to provide a “fresh start.” To prevent the fraudulent use of the bankruptcy code by a few, Section 714 punishes many—even those who may have entirely legitimate reasons for not filing. By repealing this section and allowing the courts to review the intent of the debtor on a case-by-case basis, Congress will be better able to protect those debtors who truly need it, and to prevent abuse of the bankruptcy system. Indeed, these decisions are native soil for the courts, and with a developed body of evidence they will make the appropriate decision as to whether or not a debtor should be granted a discharge for their tax debts.

By looking at returns on a case-by-case basis, judges will effectively evaluate whether a return should be exempted from discharge. Although many facts can be stipulated to for purposes of judicial economy, parties should produce evidence regarding the reason for the late filing. Both the Hindenlang and Colsen decisions, as well as Congress’s solution, go too far in both directions. As the Moroney and Payne courts have stated, there may be times when there is a reason for filing late that satisfies the Beard test. Congress should repeal Section 714 of the BAPCPA, and allow courts to make a determination on a case-by-case basis.