§ 132.3     Governmental Units
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 132.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

The good news is that the Bankruptcy Reform Act of 1994 cleared up most of the confusion created by the Bankruptcy Rules with respect to the timely filing of claims by governmental units.1 11 U.S.C. § 502(b)(9), as amended by the 1994 Act, provided that, upon objection, an untimely claim is not allowed, “except that a claim of a governmental unit shall be timely filed if it is filed before 180 days after the date of the order for relief or such later time as the Federal Rules of Bankruptcy Procedure may provide.”2 Section 502(b)(9) was further amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)3 to add an ending clause: “and except that in a case under chapter 13, a claim of a governmental unit for a tax with respect to a return filed under section 1308 shall be timely if the claim is filed on or before the date that is 60 days after the date on which such return was filed as required.”4

[2]

In Chapter 13 cases filed after October 22, 1994,5 the claims of governmental units are defined by § 502(b)(9) to be timely if filed before 180 days after the petition. The 180-day period can be extended by the Federal Rules of Bankruptcy Procedure. This definition of timeliness for proofs of claim by governmental units is not restricted by § 502(b)(9) to any particular kind of claim—it applies to secured, unsecured and priority claims of a governmental unit. In contrast, the extension added by BAPCPA applies only to certain kinds of tax claims.6

[3]

As amended effective December 1, 1996, the Bankruptcy Rules permit a governmental unit to extend the time for filing a timely proof of claim beyond the 180 days in § 502(b)(9) if a motion for extension is filed before 180 days after the petition.7 Prior to the 1996 amendment, Bankruptcy Rule 3002(c) permitted a governmental unit to extend the time for filing a timely proof of claim only if a motion for extension was filed within 90 days after the first date set for the meeting of creditors.8 The inconsistency between former Bankruptcy Rule 3002(c) and the 1994 amendment to § 502(b)(9) persisted only between October 22, 1994, and December 1, 1996. During the brief period of inconsistency, one bankruptcy court held that a governmental unit could move for an extension of time to file a proof of claim until expiration of the 180-day period in (new) § 502(b)(9), notwithstanding that former Bankruptcy Rule 3002(c)(1) seemed to require somewhat more urgency.9

[4]

In bankruptcy cases filed after October 22, 1994, and before December 1, 1996, the lame-duck version of Bankruptcy Rule 3002(c) was not consistent with § 502(b)(9) of the Code in other respects. For example, to the extent that (former) Bankruptcy Rule 3002(c) imposed a 90-day limitation on the timely filing of claims by governmental units, the Rule was inconsistent with the 180-day timeliness definition in § 502(b)(9) between October of 1994 and December of 1996.

[5]

Effective December 1, 1996, Bankruptcy Rule 3002(c) was amended to (almost) conform to § 502(b)(9) with respect to the timely filing of claims by governmental units. The 1996 amendment to Rule 3002(c)(1) defines “timely” as “not later than 180 days after the date of the order for relief.”10 The phrase that appears in the 1994 amendment to § 502(b)(9) is “before 180 days after the date of the order for relief.” The Advisory Committee note to the 1996 rule amendment explains that this change in words was intended “to avoid any confusion as to whether a governmental unit’s proof of claim is timely filed under § 502(b)(9) if it is filed on the 180th day after the order for relief.”11 Because of the (unusual) cross-reference to the Bankruptcy Rules in § 502(b)(9),12 this is the exceptional circumstance in which the rule probably can add a day to the Code.

[6]

The definition of timely filing for claims of governmental units in § 502(b)(9) is counted differently than the 90-day period for timely filing nongovernmental claims in Bankruptcy Rule 3002(c). The 180 days in § 502(b)(9) is counted from the date of the order for relief—the date of the filing of the petition in a Chapter 13 case.13 The 90 days in Bankruptcy Rule 3002(c) is counted from the first date set for the meeting of creditors. There is no obvious good reason for counting the timeliness of proofs of claim differently for governmental and nongovernmental claims. This difference in counting serves only to make a complicated process more complicated.

[7]

The practical difference for governmental units between new § 502(b)(9) and former Bankruptcy Rule 3002(c) is approximately 40 days. In Chapter 13 cases filed after October 22, 1994, governmental units have 180 days after the filing of the petition in which to file a timely proof of claim, unless the extension for certain tax claims added by BAPCPA increases that time.14 In Chapter 13 cases filed before October 22, 1994, a governmental unit could file a timely proof of claim (or request for extension of time) within 90 days of the first date set for the meeting of creditors—approximately 140 days after the filing of the petition because meetings of creditors are typically 40 to 50 days after the petition in a Chapter 13 case.15

[8]

Section 502(b)(9) as amended in 1994 permits the Federal Rules of Bankruptcy Procedure to specify a later time for the timely filing of a claim by a governmental unit. This odd cross-reference from the Code to the Rules admits the possibility that the Rules drafters will amend Bankruptcy Rule 3002(c) or some other rule to specify a later time for the timely filing of a claim by a governmental unit. The 1996 amendments to Bankruptcy Rule 3002(c) affect the 180-day definition of timeliness in § 502(b)(9) in two ways: (1) Bankruptcy Rule 3002(c)(1) clarifies that a governmental unit’s proof of claim is timely filed on the 180th day after the order for relief;16 (2) Bankruptcy Rule 3002(c) permits the bankruptcy court to grant a governmental unit an extension of time for the filing of a proof of claim if the motion for extension of time is filed not later than 180 days after the date of the order for relief. In 1999, Bankruptcy Rule 1019(6) was amended to generously redefine “timely” for the filing of requests for administrative expenses by governmental units at conversion from Chapter 13 to Chapter 7.17 BAPCPA amended § 503(b)(1)(D) to eliminate altogether the requirement that a governmental unit file a request for payment of an administrative expense for many forms of postpetition taxes.18

[9]

The longer 180-day period for the timely filing of proofs of claim in § 502(b)(9) is only available to a governmental unit. Section 101(27) of the Code broadly defines governmental unit to include the United States, the states and departments, agencies or instrumentalities of the United States or of a state.19 One court analyzed this definition and concluded that a federal credit union is a governmental instrumentality and thus was entitled to the extended 180-day period for the timely filing of proofs of claim in a Chapter 13 case.20

[10]

The 2005 amendment to § 502(b)(9) references new § 1308, which imposes on every Chapter 13 debtor the duty to file with appropriate tax authorities “all tax returns for all taxable periods ending during the 4-year period ending on the date of the filing of the petition.”21 If all required returns are not filed by the day before the first scheduled meeting of creditors, § 1308(b) provides a complex mechanism for additional time.22 Conversion or dismissal of the case is the statutory consequence for failure to file the necessary returns.23

[11]

Under the 2005 amendment to § 502(b)(9), a governmental unit is given additional time to file a tax claim, triggered by the date the debtor files a return required by § 1308. This moving deadline is “on or before the date that is 60 days after the date on which such return was filed as required.”24 On December 1, 2008, Bankruptcy Rule 3002 was amended to reflect the 2005 changes to the Code. Rule 3002(c)(1) now provides: “a claim resulting from a tax return filed under § 1308 is timely filed if it is filed no later than 180 days after the date of the order for relief or 60 days after the date of the filing of the tax return.”25 The disjunctive “or” in amended Bankruptcy Rule 3002(c)(1) indicates that the normal 180-day deadline for governmental proofs of claim—counted from the petition—is extended for tax claims (only) when a tax return required by § 1308 is filed postpetition and 60 days after the filing of the required return falls more than 180 days after the petition.26


 

1  See § 275.2 [ In General: Filing is Required for Allowance ] § 132.2  In General: Filing is Required for Allowance.

 

2  11 U.S.C. § 502(b)(9), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 213, 108 Stat. 4106 (1994).

 

3  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

4  11 U.S.C. § 502(b)(9), as amended by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23 (2005). See § 133.5  Tax Claim Exception after BAPCPA and § 136.3  Taxes after BAPCPA. See also discussion of tax return duties imposed on debtors by BAPCPA beginning at § 42.2  Consequences of Failure to File Required Information, Including “Automatic Dismissal”.

 

5  See Pub. L. No. 103-394, § 702, 108 Stat. 4106 (1994).

 

6  See below in this section, and see §§ 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA.

 

7  Bankruptcy Rule 3002(c)(1), as amended effective December 1, 1996, provided:

(c) TIME FOR FILING. In a chapter 7 liquidation, chapter 12 family farmer’s debt adjustment, or chapter 13 individual’s debt adjustment case, a proof of claim is timely filed if it is filed not later than 90 days after the first date set for the meeting of creditors called under § 341(a) of the Code, except as follows:
(1) A proof of claim filed by a governmental unit is timely filed if it is filed not later than 180 days after the date of the order for relief. On motion of a governmental unit before the expiration of such period and for cause shown, the court may extend the time for filing of a claim by the governmental unit.
Fed. R. Bankr. P. 3002(c) (as amended effective Dec. 1, 1996).

 

8  Bankruptcy Rule 3002(c)(1) prior to amendment in 1996 provided:

(c) TIME FOR FILING. In a chapter 7 liquidation, chapter 12 family farmer’s debt adjustment, or chapter 13 individual’s debt adjustment case, a proof of claim shall be filed within 90 days after the first date set for the meeting of creditors called pursuant to § 341(a) of the Code, except as follows:
(1) On motion of the United States, a state, or subdivision thereof before the expiration of such period and for cause shown, the court may extend the time for filing of a claim by the United States, a state, or subdivision thereof.
Fed. R. Bankr. P. 3002(c)(1) (prior to 1996 amendment).

 

9  See In re Lang, 196 B.R. 528 (Bankr. D. Ariz. 1996) (In a Chapter 13 case filed after the 1994 amendments to the Code and before the 1996 amendments to Bankruptcy Rule 3002(c), a county government’s motion for extension of time was untimely when measured against the 180-day bar date for governmental claims in § 502(b)(9).).

 

10  Fed. R. Bankr. P. 3002(c)(1) (as amended effective Dec. 1, 1996).

 

11  Advisory Committee Note to 1996 amendment to Bankruptcy Rule 3002(c)(1).

 

12  See § 275.1 [ 1994 Code Amendments Changed the Rules ] § 132.1  1994 Code Amendments Changed the Rules.

 

13  See 11 U.S.C. § 301. See, e.g., In re Knize, 210 B.R. 773, 777–78 (Bankr. N.D. Ill. 1997) (“Rule 3002(c)(1) provides that a ‘proof of claim filed by a governmental unit is timely filed if it is filed not later than 180 days after the date of the order for relief.’ . . . The voluntary bankruptcy petition was filed on October 16, 1996; IRS’s amended claim was filed on February 20, 1997, well within the 180-day deadline. Thus, its amended proof of claim was timely filed.”).

 

14  See §§ 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA. Bankruptcy Rule 3002(c)(1) (as amended effective December 1, 1996) also permits extension of the 180-day time limit if the motion for extension is filed by the governmental unit not later than 180 days after the date of the order for relief. Fed. R. Bankr. P. 3002(c)(1) (as amended effective Dec. 1, 1996). See § 275.2 [ In General: Filing is Required for Allowance ] § 132.2  In General: Filing is Required for Allowance.

 

15  See § 42.1 [ Timing and Procedure ] § 43.1  Timing and Procedure.

 

16  See above in this section.

 

17  See §§ 279.1 [ Priority Claims, Including Requests for Payment of Administrative Expenses ] § 132.6  Priority Claims, Including Requests for Payment of Administrative Expenses and 314.1 [ On Postpetition Claims ] § 142.5  On Postpetition Claims.

 

18  See §§ 279.1 [ Priority Claims, Including Requests for Payment of Administrative Expenses ] § 132.6  Priority Claims, Including Requests for Payment of Administrative Expenses and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA.

 

19  11 U.S.C. § 101(27).

 

20  In re Trusko, 212 B.R. 819 (Bankr. D. Md. 1997).

 

21  11 U.S.C. § 1308(a), as amended by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23 (2005), discussed in detail in § 391.1 [ Tax Return Duties One Day before First Scheduled Meeting of Creditors ] § 42.6  Tax Return Duties One Day before First Scheduled Meeting of Creditors.

 

22  See §§ 391.1 [ Tax Return Duties One Day before First Scheduled Meeting of Creditors ] § 42.6  Tax Return Duties One Day before First Scheduled Meeting of Creditors and 398.1 [ Holding Open the Meeting of Creditors ] § 43.7  Holding Open the Meeting of Creditors.

 

23  See 11 U.S.C. § 1307(e), discussed in § 393.1 [ Consequences of Failure to File or Provide Tax Returns ] § 42.8  Consequences of Failure to File or Provide Tax Returns.

 

24  11 U.S.C. § 502(b)(9), as amended by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23 (2005), discussed in §§ 391.1 [ Tax Return Duties One Day before First Scheduled Meeting of Creditors ] § 42.6  Tax Return Duties One Day before First Scheduled Meeting of Creditors, 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA.

 

25  Fed. R. Bankr. P. 3002(c)(1) (as amended effective Dec. 1, 2008). This Rule had been one of the Interim Bankruptcy Rules applicable to cases filed on or after October 17, 2005, prior to becoming an Official Rule.

 

26  See §§ 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA.