Dennis Berkovich v. California Franchise Tax Board

                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


IN RE DENNIS BERKOVICH; MARINA           No. 20-60046
VOLOSHIN,
                         Debtors,           BAP No.
                                            20-1025

DENNIS BERKOVICH,
                          Appellant,       OPINION

                v.

CALIFORNIA FRANCHISE TAX BOARD,
                       Appellee.

             Appeal from the Ninth Circuit
              Bankruptcy Appellate Panel
  Faris, Lafferty III, and Spraker, Bankruptcy Judges,
                         Presiding

        Argued and Submitted October 4, 2021
                Pasadena, California

                Filed October 14, 2021
2                        IN RE BERKOVICH

    Before: Susan P. Graber and John B. Owens, Circuit
      Judges, and Charles R. Breyer, * District Judge.

                    Opinion by Judge Breyer


                          SUMMARY **


                           Bankruptcy

    The panel affirmed and adopted as its own, with one
exception, the Bankruptcy Appellate Panel’s opinion
affirming a grant of summary judgment to the California
Franchise Tax Board and holding that Dennis Berkovich’s
tax debt was not discharged in bankruptcy because the debt
derived from a “report or notice” “equivalent” to a tax return
that he had failed to submit as required by California law.

    In the BAP’s opinion, adopted by the panel and attached
as an appendix to the panel’s opinion, the BAP held that
11 U.S.C. § 523(a)(1)(B) provides that, if a taxpayer fails to
file a required “return, or equivalent report or notice,” the
relevant tax debt is not discharged. Cal. Rev. & Tax Code
§ 18622(a) requires a taxpayer to make a “report” to the
California Franchise Tax Board if the Internal Revenue
Service changes the taxpayer’s federal income tax liability.
Berkovich, a chapter 13 debtor, filed his state tax returns but
failed to inform the Franchise Tax Board of increased federal

    *
     The Honorable Charles R. Breyer, United States District Judge for
the Northern District of California, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                     IN RE BERKOVICH                       3

tax assessments. The BAP held that the report required
under § 18622(a) is an “equivalent report” within the
meaning of § 523(a)(1)(B).           Accordingly, under
§ 523(a)(1)(B), Berkovich’s tax debt was not discharged.

   The panel declined to adopt footnote 6 of the BAP’s
opinion, concerning a case not before the panel, and
expressed no view on the substance of the footnote.


                        COUNSEL

Andrew E. Smyth (argued), SW Smyth LLP, Los Angeles,
California; Robert L. Goldstein, San Francisco, California;
for Appellant.

Donny P. Le (argued), Deputy Attorney General; Lisa W.
Chao, Supervising Deputy Attorney General; Tamar
Pachter, Senior Assistant Attorney General; Office of the
Attorney General, Los Angeles, California; for Appellee.


                        OPINION

BREYER, District Judge:

    Dennis Berkovich appeals the Ninth Circuit Bankruptcy
Appellate Panel’s (“BAP”) published decision affirming a
grant of summary judgment to the California Franchise Tax
Board. The BAP held that Berkovich’s tax debt had not been
discharged in bankruptcy because it derived from a “report
or notice” “equivalent” to a tax return that he had failed to
submit as required by California law.            11 U.S.C.
§ 523(a)(1)(B); see also Cal. Rev. & Tax. Code § 18622(a).
4                    IN RE BERKOVICH

    We affirm and adopt as our own, with one exception, the
well-reasoned BAP opinion, In re Berkovich, 619 B.R. 397
(B.A.P. 9th Cir. 2020), which we attach as an appendix. We
decline to adopt footnote 6 of the BAP’s opinion, as that
passage concerns a case not before us; we express no view
on the substance of the footnote. In adopting the BAP’s
opinion, we note that our prior decision In re Jackson,
184 F.3d 1046, 1051 (9th Cir. 1999), has been superseded by
the 2005 amendments to 11 U.S.C. § 523(a). Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005,
Pub. L. No. 109-8 § 714, 119 Stat. 23, 128–29; cf. Miller v.
Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc).

    AFFIRMED.
IN RE BERKOVICH   5




 APPENDIX
 6                          IN RE BERKOVICH
         Case: 20-1025, Document: 19, Filed: 10/05/2020   Page 1 of 16
                                                                          FILED
                                                                           OCT 5 2020
                        ORDERED PUBLISHED                            SUSAN M. SPRAUL, CLERK
                                                                         U.S. BKCY. APP. PANEL
                                                                         OF THE NINTH CIRCUIT

         UNITED STATES BANKRUPTCY APPELLATE PANEL
                   OF THE NINTH CIRCUIT

In re:                                         BAP No. CC-20-1025-FLS
DENNIS BERKOVICH and MARINA
VOLOSHIN,                                      Bk. No. 1:12-bk-17302-MB
            Debtors.
                                               Adv. No. 1:19-ap-01007-MB
DENNIS BERKOVICH,
             Appellant,
v.                                             OPINION
CALIFORNIA FRANCHISE TAX
BOARD,
             Appellee.

             Appeal from the United States Bankruptcy Court
                  for the Central District of California
             Maureen A. Tighe, Bankruptcy Judge, Presiding

                          APPEARANCES:
Andrew E. Smyth argued for appellant; Donny P. Le argued for appellee.

Before: FARIS, LAFFERTY, and SPRAKER, Bankruptcy Judges.

FARIS, Bankruptcy Judge:

                             INTRODUCTION

      In this appeal (and another appeal which we are deciding

concurrently), we consider the interplay between the Bankruptcy Code and

a state statute relating to tax returns. A California statute (Revenue and



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Taxation Code (“RTC”) section 18622(a)) requires a taxpayer to make a

“report” to the California Franchise Tax Board (“FTB”) if the Internal

Revenue Service (“IRS”) changes the taxpayer’s federal income tax liability.

Section 523(a)(1)(B)1 of the Bankruptcy Code provides that, if a taxpayer

fails to file a required “return, or equivalent report or notice,” the relevant

tax debt is not discharged.

      Chapter 13 debtor Dennis Berkovich filed his state tax returns but

failed to inform the FTB of increased federal tax assessments. The FTB

argued that the taxes were nondischargeable under § 523(a)(1)(B) because

Mr. Berkovich had failed to file the required “reports” of the increased tax

assessments with the FTB. The bankruptcy court granted the FTB summary

judgment and denied discharge of the tax debts.

      We hold that the report required under RTC section 18622(a) is an

“equivalent report” within the meaning of § 523(a)(1)(B). Therefore, we

AFFIRM. We publish this decision because the interplay between

§ 523(a)(1)(B), RTC section 18622(a), and other applicable California

statutes presents questions of first impression at the appellate level in this

circuit.




       1
         Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.

                                           2


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                          FACTUAL BACKGROUND2

      Mr. Berkovich filed California state tax returns as required for the

2003, 2004, and 2005 tax years.

      In 2008, the IRS assessed about $145,000 of additional federal income

taxes against Mr. Berkovich for those years. He did not notify the FTB of

the increased federal assessments as required under state law.

      The FTB learned of the federal assessments from the IRS. It assessed

Mr. Berkovich additional state income taxes totaling approximately $45,000

plus penalties and interest for the relevant tax years. Mr. Berkovich did not

challenge the assessments and did not pay the additional state taxes.

      In August 2012, Mr. Berkovich and his wife, Marina Voloshin, filed a

chapter 13 petition. They scheduled approximately $773,000 in secured and

unsecured debt, including $100,000 in tax debt due to the FTB.

      The debtors filed a proposed chapter 13 plan that treated the state tax

debt as a general unsecured claim to be paid pro rata with other unsecured

claims. They proposed paying 0.9% of the allowed nonpriority unsecured

claims.

      The bankruptcy court confirmed the plan. Over the next five years,

the debtors completed all required plan payments, less than $1,000 of

which was distributed to the FTB. They received a discharge under


      2
       The facts are undisputed. We rely on the parties’ stipulated facts and the
bankruptcy court’s recitation of facts in its memorandum decision.

                                           3


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§ 1328(a).

      The following year, the FTB filed a nondischargeability complaint

against Mr. Berkovich. It alleged that the state tax debts were

nondischargeable under § 523(a)(1)(B)(i) because Mr. Berkovich failed to

report the increased federal tax assessments to the FTB and failed to

challenge the FTB’s notices of proposed tax assessment.

      The bankruptcy court granted summary judgment in favor of the

FTB, holding that the report required by RTC section 18622(a) is an

“equivalent report” under § 523(a)(1)(B)(i), such that the increased state

taxes are not dischargeable. Mr. Berkovich timely appealed.

                               JURISDICTION

      The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334

and 157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.

                                    ISSUE

      Whether the bankruptcy court erred in granting the FTB summary

judgment to except from discharge Mr. Berkovich’s state tax debts.

                          STANDARD OF REVIEW

      We review de novo the bankruptcy court’s decision to grant or deny

summary judgment. Boyajian v. New Falls Corp. (In re Boyajian), 564 F.3d

1088, 1090 (9th Cir. 2009). “De novo review requires that we consider a

matter anew, as if no decision had been made previously.” Francis v.

Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014) (citations


                                        4


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omitted).

      We employ the same summary judgment standards as the

bankruptcy court. Summary judgment should be granted “if the movant

shows that there is no genuine issue as to any material fact and the movant

is entitled to judgment as a matter of law.” Wank v. Gordon (In re Wank), 505

B.R. 878, 886 (9th Cir. BAP 2014) (citing Civil Rule 56(a), made applicable in

adversary proceedings by Rule 7056). Pure questions of law are

appropriate for summary judgment. See Schrader v. Idaho Dep’t of Health &

Welfare, 768 F.2d 1107, 1110 (9th Cir. 1985).

                                 DISCUSSION

A.    Mr. Berkovich’s failure to report changes to his federal taxes to the
      FTB under RTC section 18622(a) rendered his state tax debts
      nondischargeable.

      Mr. Berkovich primarily argues on appeal that the reports required

under RTC section 18622(a) are not “returns,” so his failure to file them did

not render his tax debts nondischargeable. He is wrong.

      1.     Section 523(a)(1)(B) precludes the discharge of a tax debt if
             the debtor fails to file a required return or an equivalent
             report or notice.

      We begin with the statutory language. “The preeminent canon of

statutory interpretation requires us to presume that [the] legislature says in

a statute what it means and means in a statute what it says there. Thus, our

inquiry begins with the statutory text, and ends there as well if the text is


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unambiguous.” Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th

Cir. 2009) (citation omitted).

      Mr. Berkovich received his discharge under § 1328(a) upon

completion of the plan payments. A discharge under § 1328(a) explicitly

excludes the discharge of any debt “of the kind specified in . . . paragraph

(1)(B) . . . of section 523(a)[.]” § 1328(a). Section 523(a)(1)(B) pertains, in

relevant part, to a debt:

      (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[.]

§ 523(a)(1)(B). Section 523(a) also provides, in the “hanging paragraph” at

the end of the subsection:

      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

                                         6


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      Revenue Code of 1986, or a similar State or local law.

§ 523(a). In other words, a tax debt is nondischargeable if the debtor failed

to file a required return or “equivalent report or notice[,]” where “return”

is defined by “applicable nonbankruptcy law.”

      2.     RTC section 18622(a) requires taxpayers to report to the FTB
             any changes to their federal income tax.

      The only question on appeal is whether the report required by RTC

section 18622(a) that Mr. Berkovich failed to file is a “a return, or

equivalent report or notice” within the meaning of § 523(a)(1)(B). RTC

section 18622(a) provides:

      (a) If any item required to be shown on a federal tax return,
      including any gross income, deduction, penalty, credit, or tax
      for any year of any taxpayer is changed or corrected by the
      Commissioner of Internal Revenue or other officer of the
      United States or other competent authority, or where a
      renegotiation of a contract or subcontract with the United States
      results in a change in gross income or deductions, that taxpayer
      shall report each change or correction, or the results of the
      renegotiation, within six months after the date of each final
      federal determination of the change or correction or
      renegotiation, or as required by the Franchise Tax Board, and
      shall concede the accuracy of the determination or state
      wherein it is erroneous.

Cal. Rev. & Tax. Code § 18622(a) (emphases added). The FTB prescribes the

manner in which the taxpayer must report the changes or corrections:

      (c) Notification of a change or correction by the Commissioner
      of Internal Revenue or other officer of the United States or other

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      competent authority, or renegotiation of a contract or
      subcontract with the United States that results in a change in
      any item or the filing of an amended return must be
      sufficiently detailed to allow computation of the resulting
      California tax change and shall be reported in the form and
      manner as prescribed by the Franchise Tax Board.

Cal. Rev. & Tax. Code § 18622(c) (emphases added). The regulation

effectuating this requirement mandates that the taxpayer make the report:

      (a) Section 18622, of the Revenue and Taxation Code, requires
      that a taxpayer report certain specified federal changes.

      Such notification shall be made by mailing to the Franchise Tax
      Board, Audit Section, P.O. Box 1673, Sacramento, CA
      95812-1673, Attn: RAR/VOL, the original or a copy of the final
      determination or renegotiation agreement as well as any other
      data upon which such final determination or renegotiation
      agreement is claimed. If requested to do so the Franchise Tax
      Board will make a copy of any final determination or
      renegotiation agreement furnished to it, and return the
      taxpayer’s copy to him. The notification must be given by the
      taxpayer regardless of whether he believes any modification of
      his tax liability will be required.

Cal. Code Regs. tit. 18, § 19059 (emphases added).

      Thus, the plain language of § 523(a)(1)(B) precludes a discharge of the

debtor’s tax debt if he fails to file a “return, or equivalent report or notice, if

required” by state law. The plain language of the applicable state statute

requires that a taxpayer “report” to the FTB if the taxpayer receives notice

of changes or corrections to his federal income tax. In this case,


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Mr. Berkovich did not file the “report” that state law required.

       3.       RTC section 18622(a) reports are “equivalent reports” under
                § 523(a)(1)(B).

       We next consider whether the “report” required by RTC section

18622(a) is “equivalent” to a “return” within the meaning of § 523(a)(1)(B).

We conclude that it is.

       The Fourth Circuit’s decision in Maryland v. Ciotti (In re Ciotti), 638

F.3d 276 (4th Cir. 2011), is directly on point. In that case, the debtor filed for

chapter 7 bankruptcy protection and obtained a discharge. Subsequently,

the IRS informed her that it had significantly increased her federal taxable

income for certain pre-bankruptcy tax years. A Maryland statute, which is

similar to RTC section 18622(a), required the debtor to report such changes

to the Maryland tax authorities. 638 F.3d at 278.3 The debtor did not notify



       3
           The relevant state statute provides:

                                          In general

       (a) If the Internal Revenue Service issues a final determination that
       increases federal taxable income, federal estate, or federal
       generation-skipping transfer tax reported on a federal return, the tax
       collector shall assess the financial institution franchise tax, public service
       company franchise tax, income tax, Maryland estate tax, or Maryland
       generation-skipping transfer tax on the increase in the taxable net
       earnings, gross receipts, Maryland taxable income, federal credit for State
       death tax, or federal credit for State generation-skipping transfer tax that
       results from the federal adjustment.

                                       Report required
                                                                               (continued...)

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the state of the IRS adjustment, but the IRS forwarded its determination to

the state tax authority, which made adjustments to the debtor’s state

returns that resulted in an additional $500,000 in taxes, penalties, and

interest. The debtor sought a determination that the tax debt had been

discharged. The state argued that the debt was excepted from discharge

under § 523(a)(1)(B). Id.

      The Fourth Circuit held that the tax debt was nondischargeable. It

rejected the debtor’s argument that the required state report was “not

sufficiently similar to a return [such] that the report could be considered an

‘equivalent report or notice.’” Id. at 280. It noted that the hanging

paragraph defined “return” as pursuant to “applicable nonbankruptcy

law.” It referenced a four-part test for determining “returns”:

      [I]n order for a document to be considered a ‘return,’ under
      either the bankruptcy or the tax laws, it must (1) purport to be a
      return; (2) be executed under penalty of perjury; (3) contain
      sufficient data to allow calculation of tax; and (4) represent an
      honest and reasonable attempt to satisfy the requirements of
      the tax laws.

      3
        (...continued)
      (b) Within 90 days after the Internal Revenue Service issues to a person
      the final determination to which subsection (a) of this section refers, the
      person shall submit to the tax collector a report of federal adjustment that
      includes:

             (1) a statement of the amount of the increase; and

             (2) if the person contends that the final federal determination is
             erroneous, an explanation of the reasons for the contention.

Md. Code Tax-Gen. § 13-409.

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Id. (quoting Moroney v. United States (In re Moroney), 352 F.3d 902, 905 (4th

Cir. 2003)). It then concluded that the debtor’s required reports under state

law were similar to the type of reports contemplated by § 523(a)(1)(B). It

held that, although the state report does not mandate a signature, it

requires the same level of truthfulness, and giving false or misleading

information is punishable by a monetary fine and imprisonment. It also

noted that state law requires that the report include a copy of the federal

audit, which would presumably include information to calculate the state

tax liability. It held that the additional information required by the state

report (i.e., a challenge to the federal assessment) does not remove the state

report from the definition of “equivalent report.” Id. at 280-81.

       Finally, the Fourth Circuit rejected the debtor’s argument that the

required report was “given” to the state tax collector when the IRS

provided notice of the revised assessments. State law requires that “the

person shall submit to the tax collector a report of federal adjustment . . . .”

Id. at 281 (quoting Md. Code Tax-Gen. § 13-409(b)).

       The Ninth Circuit has not explicitly ruled on this issue, but courts

within this circuit have cited Ciotti with approval. See United States v.

Martin (In re Martin), 542 B.R. 479, 485 (9th Cir. BAP 2015) (relying on

Ciotti’s analysis of Congressional intent behind § 523(a)(1)(B)); Stapley v.

California ex rel. Franchise Tax Bd. (In re Stapley), 609 B.R. 209, 226 (Bankr.

N.D. Cal. 2019) (holding that the debtor’s failure to file RTC section


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18622(a) reports rendered the tax debt nondischargeable and stating that

“Ciotti involved Maryland statutes which are substantially the same as

California’s and the Ciotti court’s reasoning is persuasive and this court

will follow it.”); Cal. Franchise Tax Bd. v. Schabbing (In re Schabbing), Adv.

No. 17-04079 at 3 (Bankr. N.D. Cal. Feb. 2, 2018) (unpublished disposition)

(considering the plain language of § 523(a)(1)(B) on a motion for summary

judgment and holding that “[t]his court agrees with the Fourth Circuit’s

reasoning, and it finds that § 18622’s reporting requirements fall within

§ 523(a)(1)(B).”). An authoritative treatise also agrees. 4 Collier on

Bankruptcy ¶ 523.07[3][a] (Richard Levin & Henry J. Sommer eds., 16th

ed.) (“The reference to the failure to provide ‘notice’ means that if a debtor

is obligated under nonbankruptcy law to file an amended return or give

notice to a governmental unit of an amendment or correction to a prior

filed federal tax return, the failure to do so will render nondischargeable

any corresponding tax liability to the governmental unit.” (footnote

omitted)).

      We also agree with the Fourth Circuit’s reasoning. The report

required under RTC section 18622(a) furnishes the state tax authority with

information needed to ascertain the taxpayer’s state tax liability. For

purposes of § 523(a)(1)(B), the report is equivalent to a return, and the

failure to file such a report excepts the tax debt from discharge.

      Mr. Berkovich argues that the report is not a “return” under


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§ 523(a)(1)(B). He apparently thinks that an “equivalent report” under

§ 523(a)(1)(B) is limited to a “return,” and anything not expressly a

“return” is excluded.

       This argument ignores the fact that § 523(a)(1)(B) was amended in

2005. Until 2005, § 523(a)(1)(B) covered only an unfiled “return,” and not an

“equivalent report or notice.”4 Mr. Berkovich’s interpretation that the

“report” must meet the definition of a “return” would render the phrase

“equivalent report or notice” meaningless and superfluous. We must give

full effect to each word in a statute. See TRW Inc. v. Andrews, 534 U.S. 19, 31

(2001) (“It is ‘a cardinal principle of statutory construction’ that ‘a statute

ought, upon the whole, to be so construed that, if it can be prevented, no

clause, sentence, or word shall be superfluous, void, or insignificant.’”

(quoting Duncan v. Walker, 533 U.S. 167, 174 (2001))); Satterfield, 569 F.3d at

953 (“Another ‘fundamental canon of statutory construction [is] that the



       4
          Virtually all of the cases that Mr. Berkovich cites predate the 2005 amendments.
For example, Mr. Berkovich cites our decision in California Franchise Tax Board v. Jerauld
(In re Jerauld), 208 B.R. 183 (9th Cir. BAP 1997), aff’d, 189 F.3d 473 (9th Cir. 1999), in
which we held that the debtor’s failure to notify the FTB of the IRS’s federal tax
reassessment did not render the tax debt nondischargeable. We interpreted the plain
language of the statute and held that § 523(a)(1)(B) unambiguously addressed only
“returns,” and the RTC section 18622(a) report was not a “return.” Id. at 188. In this pre-
2005 decision, we obviously did not consider the addition of the phrase “equivalent
report or notice.” The post-2005 case that Mr. Berkovich cites, Justice v. United States (In
re Justice), 817 F.3d 738 (11th Cir. 2016), only affirms that the four-part test to determine
a “return” is still viable, but it says nothing about the meaning of an “equivalent report
or notice.”

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words of a statute must be read in their context and with a view to their

place in the overall statutory scheme.’” (quoting FDA v. Brown &

Williamson Tobacco Corp., 529 U.S. 120, 133 (2000))). Thus, “equivalent report

or notice” must be something other than a “return.” We agree with the FTB

and the Fourth Circuit that the required report concerning the increased

federal income tax assessment is such an “equivalent report.” Mr.

Berkovich “fails to satisfactorily explain what sort of reports or notices

Congress targeted with its amendment if it was not the very sort that are

the subject of this case.” In re Ciotti, 638 F.3d at 280.

      Therefore, the bankruptcy court correctly held that the required

report to the FTB was an “equivalent report or notice” under § 523(a)(1)(B).

B.    Mr. Berkovich’s other arguments are meritless.

      Mr. Berkovich raises a smattering of other arguments that

mischaracterize the nature of the RTC section 18622(a) report or the notice

from the IRS. None of these arguments is availing.

      Mr. Berkovich argues that the phrase “equivalent report or notice”

refers to the report of a customs duty “bill of entry,” not a tax return. He

apparently relies on a grammatical parallelism. Section 523(a)(1)(B) refers

to “a tax or a customs duty” and “a return, or equivalent report or notice.”

Mr Berkovich thinks that the word “tax” must refer only to the word

“return” and the phrase “customs duty” must refer only to the phrase

“equivalent report or notice.” Neither grammar, nor logic, nor obvious


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statutory purpose support this reading. Cf. Collier on Bankruptcy ¶ 523.07

(“All categories of nondischargeability referring to ‘taxes’ apply to ‘custom

duties’ as well.” (citing S. Rep. No. 989 95th Cong., 2d Sess. 77-79 (1978)).

       He also argues that the IRS’s forwarding of the assessment to the FTB

constituted an amended “return” that satisfies § 523(a)(1)(B). Again, he

cites no authority for this position. We reject his unsupported argument.

See In re Ciotti, 638 F.3d at 281 (rejecting a similar argument that the IRS’s

notification to the state relieved the taxpayer of the duty to report the

changed assessment). In any event, RTC section 18622(a) requires that the

“taxpayer shall report each change or correction . . . and shall concede the

accuracy of the determination or state wherein it is erroneous.” (Emphasis

added.) Mr. Berkovich failed to report the IRS’s changes to the FTB and to

concede or contest the accuracy of those changes.

       Further, Mr. Berkovich contends that RTC section 18622 requires an

amended return only if he had filed an amended return with the IRS. This

argument misstates the statute. RTC section 18622(b) 5 requires a taxpayer

to file an amended state tax return if he files an amended federal tax return,

but it does not eliminate the taxpayer’s responsibility to file the report in

subsection (a). Nor does subsection (b) suggest that a report under


        5
          Subsection (b) provides that “[a]ny taxpayer filing an amended return with the
Commissioner of Internal Revenue shall also file within six months thereafter an
amended return with the Franchise Tax Board which shall contain any information as it
shall require.” Cal. Rev. & Tax. Code § 18622(b).

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                                IN RE BERKOVICH                                      21
           Case: 20-1025, Document: 19, Filed: 10/05/2020         Page 16 of 16




subsection (a) is not a “report or notice” under § 523(a)(1)(B).

                                   CONCLUSION

       The bankruptcy court did not err in granting the FTB summary

judgment. The report required by RTC section 18622(a) is an “equivalent

report or notice” under § 523(a)(1)(B). Mr. Berkovich does not dispute that

he failed to file such report with the FTB following the IRS’s assessment.

Thus, his state tax debts for the relevant tax years are excepted from

discharge under § 523(a)(1)(B). We AFFIRM.6




       6
          In another appeal which we are deciding concurrently, Sienega v. California State
Franchise Tax Board (In re Sienega), BAP No. EC-19-1334-FLS, the debtor did not file
formal tax returns but did submit reports under RTC section 18622. In this case,
Mr. Berkovich filed formal tax returns but did not submit the RTC section 18622 reports.
In both cases, we hold that the tax debts are not dischargeable. Taken together, the two
cases stand for the proposition that tax debts are not dischargeable under § 523(a)(1)(B)
if the taxpayer failed to file a return, a report under RTC section 18622, or both.

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