Shulman Bastian LLP

Section 523(a)(1)(C) Claims for Tax Fraud Require Specific Intent

On September 15, 2014, the Ninth Circuit Court of Appeals ("Court") issued the opinion Hawkins v. the Franchise Tax Board of California, et. al., Case No. 11-6276, pursuant to which the Court held that claims for non-dischargeability under Bankruptcy Code Section 523(a)(1)(C) based on a willful attempt to evade or defeat taxes requires a specific bad intent and not just mere knowledge of the consequences of the act. The Court determined the meaning of "willful" and decided there must be a specific bad intent to evade taxes. The Court's opinion is contrary to previous decisions in the Tenth Circuit where all that is required is mere knowledge of a duty to pay taxes and the voluntary and intentional violation of such duty.

For the full opinion, please click here

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