Vol. 5 No. 1, Fall 2013; Debtors Deserve the Dischargeability of Tax Liability to be “Honest and Reasonable”
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The most current version of the Bankruptcy Code, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), is considered one of the most technical and comprehensive reforms to the Bankruptcy Code. Facing a dramatic increase in consumer bankruptcies and fearing an increase in abuse of the system, Congress included stricter guidelines and rules to try and prevent debtor abuse in BAPCPA. Another addition that BAPCPA added, and at the heart of this Comment, was the addition of a hanging paragraph to the Bankruptcy Code section 523(a). The issue of whether a person can discharge their tax liability through a Chapter 7 bankruptcy proceeding for a year that they filed a tax return after April fifteenth, but before the IRS had already assessed the taxes could arise in the future. Ultimately the hanging paragraph of 11 USC § 523(a) defeats the underlying principal of bankruptcy, to help debtors in need establish a fresh start.