Taxpayer Unable to Get Refund on Unpaid Taxes Despite Bankruptcy

A taxpayer who didn’t pay his original obligations can’t sue for a tax refund even if those obligations were extinguished by a subsequent bankruptcy, a federal judge in California said.

Judge Thomas J. Whelan Nov. 14 dismissed part of a complaint filed by Michael Dicks, who sought a $1.83 million bad debt deduction for his 2013 to 2015 tax years based on a failed investment in a California restaurant technology startup.

The US Supreme Court in Flora v. United States established the “full payment rule,” which requires payment of taxes before filing for a refund, the judge said.

Dicks conceded ...