Cite as: Keith M. Lundin, Lundin On Chapter 13, § 135.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
BAPCPA made at least two changes—one codified and one not—that will impact the allowance of and objections to claims in Chapter 13 cases.
BAPCPA amended § 503(b)(1)(D) to provide that with respect to tax claims incurred by the estate, “a governmental unit shall not be required to file a request for . . . payment . . . as a condition of [the tax] being an allowed administrative expense.”1 This amendment seems to say that a taxing authority has an allowed administrative expense for taxes incurred by a bankruptcy estate without regard to whether the taxing authority filed a timely request for payment as would otherwise be required by § 503(a).2
Without the timely filing of a request for payment, it is anyone’s guess how the debtor or trustee will know that there is an allowed administrative expense for a tax incurred by a Chapter 13 estate. Until a request for payment is filed, it is hardly practical for the debtor, the trustee or any party in interest to voice an objection. Given the three- to five-year length of most Chapter 13 plans, there is a significant likelihood that Chapter 13 estates will incur taxes entitled to payment as an administrative expense under § 503(b)(1)(B). Absolving governmental units of responsibility to file a timely request for payment perhaps makes sense to taxing authorities but makes no sense for the administration of Chapter 13 cases.
The uncodified provision of BAPCPA affecting the allowance of claims is more comprehensible. Section 716(e) of BAPCPA stated the “sense of Congress” that the Judicial Conference of the United States should amend the Federal Rules of Bankruptcy Procedure in two ways: (1) to permit a governmental unit to make a timely objection to confirmation of a Chapter 13 plan until 60 days after the date on which the debtor files all tax returns required by §§ 1308 and 1325(a)(7);3 and (2) to provide “in addition to the provisions of Rule 3007” that in a Chapter 13 case no objection to a claim for a tax with respect to a return required to be filed under new § 1308 shall be filed “until such return has been filed as required.”4
The second sense of Congress instructs the Judicial Conference to amend Bankruptcy Rule 3007 to prohibit an objection to a claim for taxes with respect to a return that is required to be filed under § 1308 until that return has been filed as required. New § 1308 requires a Chapter 13 debtor to file all state or federal tax returns for all tax years ending within the four years before the petition.5 If those returns are not all filed by one day before the § 341(a) meeting of creditors, the Chapter 13 trustee is authorized to hold open the meeting of creditors for a reasonable period to allow the debtor to file all required tax returns.
It is not so unusual for taxing authorities to file proofs of claim in Chapter 13 cases for years with respect to which the debtor is required to file a tax return but has not yet done so. The second sense of Congress in 716(e) of BAPCPA invites the Rules Committee to prohibit the filing of an objection to such a claim until after the required tax return has been filed. Not unreasonably, this would relieve the taxing authority of being forced to defend a claim objection when it does not have the debtor’s version of the taxes owed for a particular tax period.
At this writing, the Judicial Conference has not yet acted to amend Bankruptcy Rule 3007 to carry out the second sense of Congress in § 716(e) of BAPCPA.
1 11 U.S.C. § 503(b)(1)(D), discussed in § 508.1 [ New Timing Issues ] § 133.5 Tax Claim Exception after BAPCPA.
2 See § 279.1 [ Priority Claims, Including Requests for Payment of Administrative Expenses ] § 132.6 Priority Claims, Including Requests for Payment of Administrative Expenses.
3 See § 503.1 [ Time for Filing Objections ] § 116.3 Time for Filing Objections after BAPCPA. 11 U.S.C. § 1308 is 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; 11 U.S.C. § 1325(a)(7)— probably a mistaken cross-reference in § 716(e) of BAPCPA—is discussed in § 496.1 [ Good-Faith Filing Requirement ] § 110.1 Good-Faith Filing Requirement after BAPCPA.
4 Pub. L. No. 109-8, § 716(e)(1) and (2), 119 Stat. 23 (2005).
5 See 11 U.S.C. § 1308, 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.