## Facts

- The IRS assessed the Youngs for 1992 federal income taxes after they filed their 1992 return on October 15, 1993, without payment.
- The Bankruptcy Code grants priority to certain income tax claims if the return was due within three years before the bankruptcy petition date, and such priority taxes are nondischargeable.  
- On May 1, 1996, the Youngs filed a Chapter 13 bankruptcy petition; before plan confirmation they sought dismissal.
- On March 12, 1997, one day before the Chapter 13 dismissal order, the Youngs filed a Chapter 7 petition.
- The Chapter 7 case was administered as a no-asset case; the Youngs received a discharge and the case closed.
- The IRS later pursued collection of the 1992 tax debt; the Youngs reopened the Chapter 7 case and sought a ruling that the tax debt had been discharged.
- The dispute turned on whether the three-year lookback period ran uninterrupted through the earlier Chapter 13 case or was suspended during that time.

## Issues

1. Whether the three-year lookback period in 11 U.S.C. § 507(a)(8)(A)(i), which affects nondischargeability under § 523(a)(1)(A), is equitably tolled during the pendency of a debtor’s prior bankruptcy case.

## Decision

- The Supreme Court affirmed the First Circuit.
- The Court held that the three-year lookback period is subject to equitable tolling and is tolled during the pendency of a prior bankruptcy petition.
- Excluding the time the Chapter 13 case was pending kept the Youngs’ 1992 income tax liability within the three-year period, making it a priority tax debt that was not discharged in Chapter 7.

## Legal Principles

- The three-year lookback in § 507(a)(8)(A)(i) functions like a limitations period and is therefore presumptively subject to equitable tolling unless tolling would conflict with statutory text.
- Congress is presumed to legislate limitations-type time periods against the background rule that equitable tolling applies absent a clear contrary indication.
- Tolling is appropriate where a prior bankruptcy case, through the automatic stay, restricts governmental collection and where failure to toll would allow strategic serial filings to eliminate tax liabilities Congress treated as nondischargeable.
- The presence of express tolling provisions elsewhere in the Bankruptcy Code does not, by itself, bar equitable tolling of § 507(a)(8)(A)(i).

## Conclusion

The Court treated the Bankruptcy Code’s three-year tax lookback as a limitations-type period and applied equitable tolling during the pendency of the Youngs’ prior Chapter 13 case, preventing discharge of their 1992 income tax debt through a later Chapter 7 filing.


Young v. United States, 535 U.S. 43 (2002)