YOUNG et ux. v. UNITED STATES

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43 OCTOBER TERM, 2001
Syllabus
YOUNG et ux. v. UNITED STATES
certiorari to the united states court of appeals for
the first circuit
No. 00–1567. Argued January 9, 2002—Decided March 4, 2002
If the Internal Revenue Service (IRS) has a claim for certain taxes for
which the return was due within three years before the individual tax-
payer files a bankruptcy petition, its claim enjoys eighth priority under
11 U. S. C. § 507(a)(8)(A)(i), and is nondischargeable in bankruptcy under
§ 523(a)(1)(A). The IRS assessed a tax liability against petitioners for
their failure to include payment with their 1992 income tax return filed
on October 15, 1993. On May 1, 1996, petitioners filed a Chapter 13
bankruptcy petition, which they moved to dismiss before a reorganiza-
tion plan was approved. On March 12, 1997, the day before the Bank-
ruptcy Court dismissed the Chapter 13 petition, petitioners filed a Chap-
ter 7 petition. A discharge was granted, and the case was closed.
When the IRS subsequently demanded that they pay the tax debt, peti-
tioners asked the Bankruptcy Court to reopen the Chapter 7 case and
declare the debt discharged under § 523(a)(1)(A), claiming that it fell
outside § 507(a)(8)(A)(i)’s “three-year lookback period” because it per-
tained to a tax return due more than three years before their Chapter
7 filing. The court reopened the case, but sided with the IRS. Peti-
tioners’ tax return was due more than three years before their Chapter
7 filing but less than three years before their Chapter 13 filing. Holding
that the “lookback period” is tolled during the pendency of a prior bank-
ruptcy petition, the court concluded that the 1992 debt had not been
discharged when petitioners were granted a discharge under Chapter 7.
The District Court and the First Circuit agreed.
Held: Section 507(a)(8)(A)(i)’s lookback period is tolled during the pend-
ency of a prior bankruptcy petition. Pp. 46–54.
(a) The lookback period is a limitations period subject to traditional
equitable tolling principles. It prescribes a period in which certain
rights may be enforced, encouraging the IRS to protect its rights before
three years have elapsed. Thus, it serves the same basic policies fur-
thered by all limitations periods: “repose, elimination of stale claims,
and certainty about a plaintiff ’s opportunity for recovery and a defend-
ant’s potential liabilities.” Rotella v. Wood, 528 U. S. 549, 555. The
fact that the lookback commences on a date that may precede the date
when the IRS discovers its claim does not make it a substantive compo-
nent of the Bankruptcy Code as petitioners claim. Pp. 46–49.

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44 YOUNG v. UNITED STATES
Opinion of the Court
(b) Congress is presumed to draft limitations periods in light of the
principle that such periods are customarily subject to equitable tolling
unless tolling would be inconsistent with statutory text. Tolling is ap-
propriate here. Petitioners’ Chapter 13 petition erected an automatic
stay under § 362(a), which prevented the IRS from taking steps to col-
lect the unpaid taxes. When petitioners later filed their Chapter 7 peti-
tion, the three-year lookback period therefore excluded time during
which their Chapter 13 petition was pending. Because their 1992 tax
return was due within that three-year period, the lower courts properly
held that the tax debt was not discharged. Tolling is appropriate re-
gardless of whether petitioners filed their Chapter 13 petition in good
faith or solely to run down the lookback period. In either case, the IRS
was disabled from protecting its claim. Pp. 49–51.
(c) The statutory provisions invoked by petitioners—§§ 523(b), 108(c),
and 507(a)(8)(A)(ii)—do not display an intent to preclude tolling here.
Pp. 51–53.
233 F. 3d 56, affirmed.
Scalia, J., delivered the opinion for a unanimous Court.
Grenville Clark III argued the cause and filed briefs for
petitioners.
Patricia A. Millett argued the cause for the United
States. With her on the briefs were Solicitor General
Olson, Assistant Attorney General O’Connor, Deputy So-
licitor General Wallace, Bruce R. Ellisen, and Thomas J.
Sawyer.
Justice Scalia delivered the opinion of the Court.
A discharge under the Bankruptcy Code does not extin-
guish certain tax liabilities for which a return was due
within three years before the filing of an individual debt-
or’s petition. 11 U. S. C. §§ 523(a)(1)(A), 507(a)(8)(A)(i). We
must decide whether this “three-year lookback period” is
tolled during the pendency of a prior bankruptcy petition.
I
Petitioners Cornelius and Suzanne Young failed to include
payment with their 1992 income tax return, due and filed on

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45 Cite as: 535 U. S. 43 (2002)
Opinion of the Court
October 15, 1993 (petitioners had obtained an extension of
the April 15 deadline). About $15,000 was owing. The In-
ternal Revenue Service (IRS) assessed the tax liability on
January 3, 1994, and petitioners made modest monthly pay-
ments ($40 to $300) from April 1994 until November 1995.
On May 1, 1996, they sought protection under Chapter 13 of
the Bankruptcy Code in the United States Bankruptcy Court
for the District of New Hampshire. The bulk of their tax
liability (about $13,000, including accrued interest) remained
due. Before a reorganization plan was confirmed, however,
the Youngs moved on October 23, 1996, to dismiss their
Chapter 13 petition, pursuant to 11 U. S. C. § 1307(b). On
March 12, 1997, one day before the Bankruptcy Court dis-
missed their Chapter 13 petition, the Youngs filed a new peti-
tion, this time under Chapter 7. This was a “no asset” peti-
tion, meaning that the Youngs had no assets available to
satisfy unsecured creditors, including the IRS. A discharge
was granted June 17, 1997; the case was closed September
22, 1997.
The IRS subsequently demanded payment of the 1992 tax
debt. The Youngs refused and petitioned the Bankruptcy
Court to reopen their Chapter 7 case and declare the debt
discharged. In their view, the debt fell outside the Bank-
ruptcy Code’s “three-year lookback period,” §§ 523(a)(1)(A),
507(a)(8)(A)(i), and had therefore been discharged, because it
pertained to a tax return due on October 15, 1993, more than
three years before their Chapter 7 filing on March 12, 1997.
The Bankruptcy Court reopened the case but sided with the
IRS. Although the Youngs’ 1992 income tax return was due
more than three years before they filed their Chapter 7 peti-
tion, it was due less than three years before they filed their
Chapter 13 petition on May 1, 1996. Holding that the
“three-year lookback period” is tolled during the pendency
of a prior bankruptcy petition, the Bankruptcy Court con-
cluded that the 1992 tax debt had not been discharged. The
District Court for the District of New Hampshire and Court

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46 YOUNG v. UNITED STATES
Opinion of the Court
of Appeals for the First Circuit agreed. 233 F. 3d 56 (2000).
We granted certiorari. 533 U. S. 976 (2001).
II
Section 523(a) of the Bankruptcy Code excepts certain in-
dividual debts from discharge, including any tax “of the kind
and for the periods specified in section . . . 507(a)(8) of this
title, whether or not a claim for such tax was filed or al-
lowed.” § 523(a)(1)(A). Section 507(a), in turn, describes
the priority of certain claims in the distribution of the debt-
or’s assets. Subsection 507(a)(8)(A)(i) gives eighth priority
to “allowed unsecured claims of governmental units, only to
the extent that such claims are for— . . . a tax on or meas-
ured by income or gross receipts— . . . for a taxable year
ending on or before the date of the filing of the petition for
which a return, if required, is last due, including extensions,
after three years before the date of the filing of the peti-
tion . . . .” (Emphasis added.) This is commonly known as
the “three-year lookback period.” If the IRS has a claim
for taxes for which the return was due within three years
before the bankruptcy petition was filed, the claim enjoys
eighth priority under § 507(a)(8)(A)(i) and is nondischarge-
able in bankruptcy under § 523(a)(1)(A).
The terms of the lookback period appear to create a loop-
hole: Since the Code does not prohibit back-to-back Chapter
13 and Chapter 7 filings (as long as the debtor did not receive
a discharge under Chapter 13, see §§ 727(a)(8), (9)), a debtor
can render a tax debt dischargeable by first filing a Chapter
13 petition, then voluntarily dismissing the petition when the
lookback period for the debt has lapsed, and finally refiling
under Chapter 7. During the pendency of the Chapter 13
petition, the automatic stay of § 362(a) will prevent the IRS
from taking steps to collect the unpaid taxes, and if the
Chapter 7 petition is filed after the lookback period has ex-
pired, the taxes remaining due will be dischargeable. Peti-

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Opinion of the Court
tioners took advantage of this loophole, which, they believe,
is permitted by the Bankruptcy Code.
We disagree. The three-year lookback period is a limita-
tions period subject to traditional principles of equitable toll-
ing. Since nothing in the Bankruptcy Code precludes equi-
table tolling of the lookback period, we believe the courts
below properly excluded from the three-year limitation the
period during which the Youngs’ Chapter 13 petition was
pending.
A
The lookback period is a limitations period because it pre-
scribes a period within which certain rights (namely, prior-
ity and nondischargeability in bankruptcy) may be enforced.
1 H. Wood, Limitations of Actions § 1, p. 1 (4th D. Moore ed.
1916). Old tax claims—those pertaining to returns due
more than three years before the debtor filed the bankruptcy
petition—become dischargeable, so that a bankruptcy decree
will relieve the debtor of the obligation to pay. The period
thus encourages the IRS to protect its rights—by, say, col-
lecting the debt, 26 U. S. C. §§ 6501, 6502 (1994 ed. and Supp.
V), or perfecting a tax lien, §§ 6322, 6323(a), (f) (1994 ed.)—
before three years have elapsed. If the IRS sleeps on its
rights, its claim loses priority and the debt becomes dis-
chargeable. Thus, as petitioners concede, the lookback
period serves the same “basic policies [furthered by] all limi-
tations provisions: repose, elimination of stale claims, and
certainty about a plaintiff ’s opportunity for recovery and
a defendant’s potential liabilities.” Rotella v. Wood, 528
U. S. 549, 555 (2000). It is true that, unlike most statutes
of limitations, the lookback period bars only some, and not
all, legal remedies 1 for enforcing the claim (viz., priority and
1 Equitable remedies may still be available. Traditionally, for example,
a mortgagee could sue in equity to foreclose mortgaged property even
though the underlying debt was time barred. Hardin v. Boyd, 113 U. S.
756, 765–766 (1885); 2 G. Glenn, Mortgages §§ 141–142, pp. 812–818 (1943);
see also Beach v. Ocwen Fed. Bank, 523 U. S. 410, 415–416 (1998) (recoup-

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48 YOUNG v. UNITED STATES
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nondischargeability in bankruptcy); that makes it a more
limited statute of limitations, but a statute of limitations
nonetheless.
Petitioners argue that the lookback period is a substantive
component of the Bankruptcy Code, not a procedural limita-
tions period. The lookback period commences on the date
the return for the tax debt “is last due,” § 507(a)(8)(A)(i), not
on the date the IRS discovers or assesses the unpaid tax.
Thus, the IRS may have less than three years to protect
itself against the risk that a debt will become dischargeable
in bankruptcy.
To illustrate, petitioners offer the following variation on
this case: Suppose the Youngs filed their 1992 tax return on
October 15, 1993, but had not received (as they received
here) an extension of the April 15, 1993, due date. Assume
the remaining facts of the case are unchanged: The IRS as-
sessed the tax on January 3, 1994; petitioners filed a Chapter
13 petition on May 1, 1996; that petition was voluntarily dis-
missed and the Youngs filed a new petition under Chapter 7
on March 12, 1997. In this hypothetical, petitioners argue,
their tax debt would have been dischargeable in the first
petition under Chapter 13. Over three years would have
elapsed between the due date of their return (April 15, 1993)
and their Chapter 13 petition (May 1, 1996). But the IRS—
which may not have discovered the debt until petitioners
filed a return on October 15, 1993—would have enjoyed less
than three years to collect the debt or prevent the debt from
becoming dischargeable in bankruptcy (by perfecting a tax
lien). The Code even contemplates this possibility, petition-
ers believe. Section 523(a)(1)(B)(ii) renders a tax debt non-
dischargeable if it arises from an untimely return filed within
two years before a bankruptcy petition. Thus, if petitioners
had filed their return on April 30, 1994 (more than two years
before their Chapter 13 petition), and if the IRS had been
ment is available after a limitations period has lapsed); United States v.
Dalm, 494 U. S. 596, 611 (1990) (same).

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unaware of the debt until the return was filed, the IRS would
have had only two years to act before the debt became dis-
chargeable in bankruptcy. For these reasons, petitioners
believe the lookback period is not a limitations period, but
rather a definition of dischargeable taxes.
We disagree. In the sense in which petitioners use the
term, all limitations periods are “substantive”: They define
a subset of claims eligible for certain remedies. And the
lookback is not distinctively “substantive” merely because it
commences on a date that may precede the date when the
IRS discovers its claim. There is nothing unusual about a
statute of limitations that commences when the claimant has
a complete and present cause of action, whether or not he is
aware of it. See 1 C. Corman, Limitation of Actions § 6.1,
pp. 370, 378 (1991); 2 Wood, supra, § 276c(1), at 1411. As for
petitioners’ reliance on § 523(a)(1)(B)(ii), that section proves,
at most, that Congress put different limitations periods on
different kinds of tax debts. All tax debts falling within the
terms of the three-year lookback period are nondischarge-
able in bankruptcy. §§ 523(a)(1)(A), 507(a)(8)(A)(i). Even if
a tax debt falls outside the terms of the lookback period, it
is nonetheless nondischargeable if it pertains to an untimely
return filed within two years before the bankruptcy petition.
§ 523(a)(1)(B)(ii). These provisions are complementary; they
do not suggest that the lookback period is something other
than a limitations period.
B
It is hornbook law that limitations periods are “custom-
arily subject to ‘equitable tolling,’ ” Irwin v. Department of
Veterans Affairs, 498 U. S. 89, 95 (1990), unless tolling would
be “inconsistent with the text of the relevant statute,”
United States v. Beggerly, 524 U. S. 38, 48 (1998). See also
American Pipe & Constr. Co. v. Utah, 414 U. S. 538, 558–559
(1974); Holmberg v. Armbrecht, 327 U. S. 392, 397 (1946); Bai-
ley v. Glover, 21 Wall. 342, 349–350 (1875). Congress must
be presumed to draft limitations periods in light of this back-

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50 YOUNG v. UNITED STATES
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ground principle. Cf. National Private Truck Council, Inc.
v. Oklahoma Tax Comm’n, 515 U. S. 582, 589–590 (1995);
United States v. Shabani, 513 U. S. 10, 13 (1994). That is
doubly true when it is enacting limitations periods to be ap-
plied by bankruptcy courts, which are courts of equity and
“appl[y] the principles and rules of equity jurisprudence.”
Pepper v. Litton, 308 U. S. 295, 304 (1939); see also United
States v. Energy Resources Co., 495 U. S. 545, 549 (1990).
This Court has permitted equitable tolling in situations
“where the claimant has actively pursued his judicial reme-
dies by filing a defective pleading during the statutory pe-
riod, or where the complainant has been induced or tricked
by his adversary’s misconduct into allowing the filing dead-
line to pass.” Irwin, supra, at 96 (footnotes omitted). We
have acknowledged, however, that tolling might be appro-
priate in other cases, see, e. g., Baldwin County Welcome
Center v. Brown, 466 U. S. 147, 151 (1984) (per curiam), and
this, we believe, is one. Cf. Amy v. Watertown (No. 2), 130
U. S. 320, 325–326 (1889); 3 J. Story, Equity Jurisprudence
§ 1974, pp. 558–559 (14th W. Lyon ed. 1918). The Youngs’
Chapter 13 petition erected an automatic stay under § 362,
which prevented the IRS from taking steps to protect its
claim. When the Youngs filed a petition under Chapter 7,
the three-year lookback period therefore excluded time dur-
ing which their Chapter 13 petition was pending. The
Youngs’ 1992 tax return was due within that three-year pe-
riod. Hence the lower courts properly held that the tax
debt was not discharged when the Youngs were granted a
discharge under Chapter 7.
Tolling is in our view appropriate regardless of petitioners’
intentions when filing back-to-back Chapter 13 and Chapter
7 petitions—whether the Chapter 13 petition was filed in
good faith or solely to run down the lookback period. In
either case, the IRS was disabled from protecting its claim
during the pendency of the Chapter 13 petition, and this pe-

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riod of disability tolled the three-year lookback period when
the Youngs filed their Chapter 7 petition.
C
Petitioners invoke several statutory provisions which they
claim display an intent to preclude tolling here. First they
point to § 523(b), which, they believe, explicitly permits dis-
charge in a Chapter 7 proceeding of certain debts that were
nondischargeable (as this tax debt was) in a prior Chapter
13 proceeding. Petitioners misread the provision. Section
523(b) declares that
“a debt that was excepted from discharge under subsec-
tion (a)(1), (a)(3), or (a)(8) of this section . . . in a prior
case concerning the debtor . . . is dischargeable in a case
under this title unless, by the terms of subsection (a) of
this section, such debt is not dischargeable in the case
under this title.” (Emphasis added.)
The phrase “excepted from discharge” in this provision is
not synonymous (as petitioners would have it) with “nondis-
chargeable.” It envisions a prior bankruptcy proceeding
that progressed to the discharge stage, from which discharge
a particular debt was actually “excepted.” It thus has no
application to the present case; and even if it did, the very
same arguments in favor of tolling that we have found per-
suasive with regard to § 507 would apply to § 523 as well.
One might perhaps have expected an explicit tolling provi-
sion in § 523(b) if that subsection applied only to those debts
“excepted from discharge” in the earlier proceeding that
were subject to the three-year lookback—but in fact it also
applies to excepted debts (see § 523(a)(3)) that were subject
to no limitations period. And even the need for tolling as
to debts that were subject to the three-year lookback is mini-
mal, since a separate provision of the Code, § 727(a)(9), con-
strains successive discharges under Chapters 13 and 7: Gen-
erally speaking, six years must elapse between filing of the

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52 YOUNG v. UNITED STATES
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two bankruptcy petitions, which would make the need for
tolling of the three-year limitation nonexistent. The ab-
sence of an explicit tolling provision in § 523 therefore sug-
gests nothing.
Petitioners point to two provisions of the Code, which, in
their view, do contain a tolling provision. Its presence
there, and its absence in § 507, they argue, displays an intent
to preclude equitable tolling of the lookback period. We dis-
agree. Petitioners point first to § 108(c), which reads:
“Except as provided in section 524 of this title, if ap-
plicable nonbankruptcy law . . . fixes a period for com-
mencing or continuing a civil action in a court other than
a bankruptcy court on a claim against the debtor . . . ,
and such period has not expired before the date of the
filing of the petition, then such period does not expire
until the later of—(1) the end of such period, including
any suspension of such period occurring on or after the
commencement of the case; or (2) 30 days after notice of
the termination or expiration of the stay . . . with re-
spect to such claim.”
Petitioners believe § 108(c)(1) contains a tolling provision.
The lower courts have split over this issue, compare, e. g.,
Rogers v. Corrosion Products, Inc., 42 F. 3d 292, 297 (CA5),
cert. denied, 515 U. S. 1160 (1995), with Garbe Iron Works,
Inc. v. Priester, 99 Ill. 2d 84, 457 N. E. 2d 422 (1983); we need
not resolve it here. Even assuming petitioners are correct,
we would draw no negative inference from the presence of
an express tolling provision in § 108(c)(1) and the absence of
one in § 507. It would be quite reasonable for Congress to
instruct nonbankruptcy courts (including state courts) to
toll nonbankruptcy limitations periods (including state-law
limitations periods) while, at the same time, assuming that
bankruptcy courts will use their inherent equitable powers
to toll the federal limitations periods within the Code.

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Finally, petitioners point to a tolling provision in
§ 507(a)(8)(A), the same subsection that sets forth the three-
year lookback period. Subsection 507(a)(8)(A) grants eighth
priority to tax claims pertaining to returns that were due
within the three-year lookback period, § 507(a)(8)(A)(i), and
to claims that were assessed within 240 days before the debt-
or’s bankruptcy petition, § 507(a)(8)(A)(ii). Whereas the
three-year lookback period contains no express tolling provi-
sion, the 240-day lookback period is tolled “any time plus 30
days during which an offer in compromise with respect to
such tax that was made within 240 days after such assess-
ment was pending.” § 507(a)(8)(A)(ii). Petitioners believe
this express tolling provision, appearing in the same subsec-
tion as the three-year lookback period, demonstrates a statu-
tory intent not to toll the three-year lookback period.
If anything, § 507(a)(8)(A)(ii) demonstrates that the Bank-
ruptcy Code incorporates traditional equitable principles.
An “offer in compromise” is a settlement offer submitted by
a debtor. When § 507(a)(8)(A)(ii) was enacted, it was IRS
practice—though no statutory provision required it—to stay
collection efforts (if the Government’s interests would not be
jeopardized) during the pendency of an “offer in compro-
mise,” 26 CFR § 301.7122–1(d)(2) (1978); M. Saltzman, IRS
Practice and Procedure ¶ 15.07[1], p. 15–47 (1981).2 Thus, a
court would not have equitably tolled the 240-day lookback
period during the pendency of an “offer in compromise,”
since tolling is inappropriate when a claimant has voluntarily
chosen not to protect his rights within the limitations period.
See, e. g., Irwin, 498 U. S., at 96. Hence the tolling provision
in § 507(a)(8)(A)(ii) supplements rather than displaces princi-
ples of equitable tolling.
2 The Code was amended in 1998 to prohibit collection efforts during the
pendency of an offer in compromise. See 26 U. S. C. § 6331(k) (1994 ed.,
Supp. V).

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54 YOUNG v. UNITED STATES
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* * *
We conclude that the lookback period of 11 U. S. C.
§ 507(a)(8)(A)(i) is tolled during the pendency of a prior bank-
ruptcy petition. The judgment of the Court of Appeals for
the First Circuit is affirmed.
It is so ordered.