IRS-prepared form 4549 was "return" for bankruptcy code purposes.

From 1983-1990, real estate consultant M failed to file tax returns. The IRS audited M; for a year and a half, he met with an agent every two or three weeks (for a total of 15 to 20 meetings).

Through these sessions, M provided the Service with the information needed to determine his substantially correct tax liability. As a result, the IRS agent reconstructed M's income and expenses and calculated his tax liability. The Service prepared Form 4549, Income Tax Examination Changes, for each year, and M signed them. The forms were filed, and the IRS accepted them.

In 1997, M filed for bankruptcy, listing the U.S. as a creditor. Asserting that the Forms 4549 were returns, he sought to have his unpaid tax obligations discharged. The government objected. Because the Forms 4549 did not include a penalty-of-perjury clause, it argued that no returns had been filed and that, under Section 523(a)(1)(B) of the Bankruptcy Code, these tax obligations were not subject to discharge.

The bankruptcy court agreed with the government, but the District Court (opinion Hurley, J.) reverses; Form 4549 constitutes a return for purposes of Section 523(a)(1)(B).

Sec. 6020(a) states:

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.

M did not file timely tax returns. However, he cooperated fully with the IRS by disclosing all necessary information, which permitted the Service to prepare Forms 4549 for the missing years. In turn, the IRS prepared the forms, which M signed and adopted. Finally, the Service filed and accepted the forms. Thus, every requirement of Sec. 6020(a) was satisfied and, consequently, the signed Forms 4549 qualify as valid tax returns for Code purposes.

The IRS has expressly acknowledged that documents other than a Form 1040 may constitute a valid tax return. In Rev. Rul. 74-203...