Cite as: Keith M. Lundin, Lundin On Chapter 13, § 136.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
BAPCPA was obsessed with taxes. BAPCPA amended § 521 to impose many new duties on Chapter 13 debtors to file and provide tax returns.1 BAPCPA added a new § 1308 mandating that Chapter 13 debtors file four years of required federal, state and local tax returns before one day before the § 341 meeting of creditors.2 The Chapter 13 trustee is authorized to hold open the meeting of creditors for a period of 120 days and beyond to allow the debtor to file required tax returns.3 BAPCPA amended § 502(b)(9) to allow a governmental unit 60 days to file a timely proof of claim after the debtor files a required tax return under § 1308.4 Section 716(e) of BAPCPA contained a sense of Congress that the Judicial Conference of the United States should amend the Bankruptcy Rules to permit a timely objection to confirmation of a Chapter 13 plan by a governmental unit until 60 days after the debtor files a tax return required by § 1308 and to prohibit the filing of objections to any claim for a tax with respect to which a return is required by § 1308 until after such return has been filed.5 BAPCPA amended § 503(b)(1)(D) to allow an administrative expense for a tax incurred by a Chapter 13 estate even when the governmental unit does not file a timely request for payment.6
BAPCPA made many other substantive changes to the Bankruptcy Code with respect to taxes, many of which could affect Chapter 13 cases. Because most claims for taxes are entitled to priority and full payment in a Chapter 13 case under § 1322(a)(2),7 Chapter 13 practitioners need at least passing familiarity with these other changes.
Administrative expenses allowed under § 503 of the Code have a second priority under § 507(a)(2) and must be paid in full to accomplish confirmation of a Chapter 13 plan under § 1322(a)(2).8 BAPCPA amended § 503(b)(1)(B) to include as administrative expenses taxes incurred by a bankruptcy estate “whether secured or unsecured, including property taxes for which liability is in rem, in personam, or both.”9 It is common for Chapter 13 debtors to own property that generates property taxes during the Chapter 13 case. Sometimes those taxes are in rem, sometimes in personam and sometimes both. In all such circumstances, property taxes incurred by a Chapter 13 estate are administrative expenses entitled to second priority and full payment through the Chapter 13 plan.
BAPCPA then amended § 503(b)(1)(D) to provide that a governmental unit “shall not be required to file a request for the payment of an expense described in [§ 503(b)(1)(B)] as a condition of its being an allowed administrative expense.”10 It is not obvious how a governmental unit with an administrative expense for a tax incurred by a Chapter 13 estate will get paid during the Chapter 13 case if the governmental unit does not file a request for payment consistent with § 503(a). Nonetheless, as amended by BAPCPA, § 503(b)(1)(D) allows an administrative expense for a postpetition tax incurred by a Chapter 13 estate even when the taxing authority does not file a request for payment.
Section 503(a) was amended in 1994 to add the requirement that a “timely” request for payment of an administrative expense must be filed except that the bankruptcy court, for cause, can allow a tardily filed request for payment of an administrative expense.11 BAPCPA absolves governmental units of not just the timeliness condition added by the 1994 amendment but of any requirement to file a request for payment of an administrative expense tax incurred by a Chapter 13 estate.
It is not clear that this relief will be good for governmental units holding tax claims that would be entitled to administrative expense status in a Chapter 13 case. Unless and until a governmental unit files a request for payment, the Chapter 13 trustee is not likely to be aware of any administrative expense for taxes and certainly won’t be paying that claim.
BAPCPA amended § 507(a)(8) in several ways to enlarge the claims of governmental units that are entitled to priority. The priority for taxes assessed within 240 days of the petition under § 507(a)(8)(A)(ii) was amended to exclude from the counting period “any time during which a stay of proceedings against collections was in effect in a prior case under this title during that 240-day period, plus 90 days.”12 Perhaps redundantly, BAPCPA added this additional suspension period as a dangling run-on sentence at the end of § 507(a)(8):
An otherwise applicable time period specified in this paragraph shall be suspended for any period during which a governmental unit is prohibited under applicable non-bankruptcy law from collecting a tax as a result of a request by the debtor for a hearing and an appeal of any collection action taken or proposed against the debtor, plus 90 days; plus any time during which the stay of proceedings was in effect in a prior case under this title or during which collection was precluded by the existence of 1 or more confirmed plans under this title, plus 90 days.13
BAPCPA added an entirely new § 511 to the Bankruptcy Code addressing the interest rate on tax claims:
(a) If any provision of this title requires the payment of interest on a tax claim or on an administrative expense tax, or the payment of interest to enable a creditor to receive the present value of the allowed amount of a tax claim, the rate of interest shall be the rate determined under applicable nonbankruptcy law.
(b) In the case of taxes paid under a confirmed plan under this title, the rate of interest shall be determined as of the calendar month in which the plan is confirmed.14
Although tax claims entitled to priority and full payment through a Chapter 13 plan can be paid without postpetition interest,15 the provision in new § 511(a) for the payment of interest “to enable a creditor to receive the present value of the allowed amount of a tax claim” might apply in a Chapter 13 case when a tax lien is a secured claim paid with present value interest under § 1325(a)(5).16 New § 511 determines the present value of an allowed tax claim under applicable nonbankruptcy law. This would impose the interest rate provisions of state or other federal law rather than the usual present value or discount rate calculation applicable to secured claims at confirmation in a Chapter 13 case.17
Section 505 was amended by BAPCPA to limit the authority of the bankruptcy court to determine “the amount or legality of any amount arising in connection with an ad valorem tax on real or personal property of the estate, if the applicable period for contesting or determining that amount under any law (other than a bankruptcy law) has expired.”18 Chapter 13 debtors who fail to contest ad valorem taxes under applicable nonbankruptcy law will find that objections to such claims during a Chapter 13 case are now beyond the statutory authority of the bankruptcy court.
Discussed in detail elsewhere,19 BAPCPA changed the dischargeability of taxes in Chapter 13 cases in several ways. More kinds of taxes are nondischargeable at the completion of payments under a Chapter 13 plan. The expanded nondischargeability of taxes has the side effect of reducing the advantage under pre-BAPCPA law that Chapter 13 debtors could pay priority taxes without interest through a confirmed Chapter 13 plan.20 After BAPCPA, even if the Chapter 13 debtor pays priority taxes in full through the plan, postpetition interest on any taxes that are nondischargeable will accrue and be nondischargeable at the completion of payments to other creditors under the plan.
All in all, it has to be said that taxing authorities came out quite well under BAPCPA. There is no good news here for Chapter 13 debtors. More taxes are entitled to priority, more taxes are nondischargeable in a Chapter 13 case, debtors have innumerable new duties to file and provide tax returns and taxing authorities have much enhanced leverage at every stage of a Chapter 13 case after BAPCPA.
1 See discussion beginning at § 41.1 Duty to File Statements and Schedules.
2 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.
3 11 U.S.C. § 1308(b), 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 and 398.1 [ Holding Open the Meeting of Creditors ] § 43.7 Holding Open the Meeting of Creditors.
4 11 U.S.C. § 502(b)(9), discussed in § 508.1 [ New Timing Issues ] § 133.5 Tax Claim Exception after BAPCPA.
5 See Pub. L. No. 109-8, § 716(e), 119 Stat. 23 (2005), discussed in §§ 503.1 [ Time for Filing Objections ] § 116.3 Time for Filing Objections after BAPCPA and 512.1 [ Allowance and Objections to Claims ] § 135.2 Allowance and Objections to Claims: Changes by BAPCPA.
6 11 U.S.C. § 503(b)(1)(D), discussed in § 508.1 [ New Timing Issues ] § 133.5 Tax Claim Exception after BAPCPA.
8 See 11 U.S.C. § 1322(a)(2), discussed in §§ 98.1 [ Plan Must Provide Full Payment ] § 73.1 Plan Must Provide Full Payment, 99.1 [ What Claims Are Priority Claims? ] § 73.2 What Claims Are Priority Claims? and 291.1 [ Treatment of Priority Claims ] § 136.1 Treatment of Priority Claims.
9 11 U.S.C. § 503(b)(1)(B)(ii).
10 11 U.S.C. § 503(b)(1)(D), discussed in § 508.1 [ New Timing Issues ] § 133.5 Tax Claim Exception after BAPCPA.
11 See Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 213(c), 108 Stat. 4133 (1994).
12 11 U.S.C. § 507(a)(8)(A)(ii)(II).
13 11 U.S.C. § 507(a)(8).
14 11 U.S.C. § 511.
15 See § 100.2 [ Interest Not Required, with Exceptions ] § 73.5 Interest Not Required, with Exceptions.
16 See § 100.3 [ Secured Priority Claims? ] § 73.7 Secured Priority Claims?.
17 See §§ 111.1 [ “Value, As of the Effective Date of the Plan” Means Interest ] § 77.1 “Value, As of the Effective Date of the Plan” Means Interest–112.2 [ Present Value After Till ] § 77.3 Present Value after Till.
18 11 U.S.C. § 505(a)(2)(C).
19 See § 548.1 [ Taxes ] § 159.1 Taxes.
Hall v. United States, __ U.S. __, 132 S. Ct. 1882, 1887-90, 182 L. Ed. 2d 840 (May 14, 2012) (Postpetition income taxes on sale of farm property by Chapter 12 debtor are not "incurred by the estate," are not administrative expenses under § 503(b) and are not entitled to priority; arguably in dicta, same result abides in Chapter 13: postpetition taxes are incurred by debtor and are not collectible unless government exercises option under § 1305 to seek collection within the Chapter 13 case. "In Chapter 12 and 13 cases, . . . there is no separately taxable estate. The debtor—not the trustee—is generally liable for taxes and files the only tax return. . . . Section 1399 of the IRC, much like § 346(d) in the Bankruptcy Code, clarified that the estate is not separately taxable in Chapter 13 (and now Chapter 12) cases. . . . A provision in Chapter 13 confirms that postpetition income taxes fall outside § 503(b). Section 1305(a)(1) . . . gives holders of postpetition claims the option of collecting postpetition taxes within the bankruptcy case—an option that the Government would never need to invoke if postpetition tax liabilities were already collectible inside the bankruptcy. . . . [P]ostpetition income taxes are not automatically collectible in a Chapter 13 plan and, a fortiori, are not administrative expenses under § 503(b)."), aff'g, 617 F.3d 1161, 1163-64 (9th Cir. Aug. 16, 2010) (O'Scannlain, Trott, Paez) (Rejecting Knudsen v. IRS, 581 F.3d 696 (8th Cir. Sept. 16, 2009) (Riley, Smith, Colloton), because Chapter 12 estate is not a taxable entity and cannot incur a tax, tax on capital gain from postpetition sale of farm property is not priority debt under § 507(a)(8) or § 507(a)(2); capital gain taxes are personal responsibility of debtor. "Since the chapter 12 estate is not a taxable entity, the chapter 12 estate cannot 'incur' a tax. We agree with those courts that have reached the same conclusion for the same reason with respect to chapter 13 estates, which are treated identically to chapter 12 estates by [26 U.S.C.] sections 1398 and 1399. . . . We recognize that our conclusion that the chapter 12 estate cannot 'incur' a tax necessarily implies that the debtor is responsible for any taxes incurred after the bankruptcy petition is filed in a chapter 12 case because the chapter 12 trustee).).
Nomellini v. IRS (In re Nomellini), 747 F. App’x 573, 573–74 (9th Cir. Dec. 28, 2018) (unpublished) (Callahan, Smith, Murguia) (Confirmed plan that paid IRS secured claim in full did not avoid or limit underlying lien; lien survived discharge and IRS can foreclose to collect amounts not paid through confirmed plan including amounts that could have but weren’t included in IRS’s claim during the Chapter 13 case. “[T]he IRS debt was secured by a perfected pre-petition lien . . . . Nomellini’s confirmed Chapter 13 bankruptcy plan recognized the IRS’s secured claim. The plan did not avoid the tax lien. In fact, it made no reference to the IRS’s tax lien nor did it make any indication of Nomellini’s intent to avoid that lien. . . . Because the plan did not explicitly avoid the IRS’s tax lien nor otherwise attempt to modify the IRS’s in rem rights, that lien passed through bankruptcy unaffected and remained in full force and effect at the time Nomellini sought to sell his home.”).
Tennessee v. Hildebrand (In re Corrin), 849 F.3d 653, 658 (6th Cir. Feb. 23, 2017) (Merritt, Moore, Stranch) (“Nonbankruptcy law” reference in § 511 means that a penalty interest rate provision of Tennessee law that is only applicable in bankruptcy cases does not apply to a tax claim in a Chapter 13 case because the state law is a “bankruptcy law.” “[T]he appropriate way to read ‘applicable nonbankruptcy law’ is as referring to any law that is not aimed solely at bankruptcy proceedings. The language of the Bankruptcy Code indicates Congress was granting authority to states to set generally applicable interest rates, but not interest rates specific to bankruptcy proceedings. . . . Tenn. Code Ann. § 67
Plymouth Park Tax Servs., LLC v. Bowers (In re Bowers), 759 F.3d 621 (6th Cir. July 21, 2014) (Keith, Clay, McKeague) (.025% interest rate on tax certificate is rate Chapter 13 plan must pay—not 18% state statutory rate that is not applicable to the negotiated rate on this certificate.), aff'g 506 B.R. 249 (B.A.P. 6th Cir. Nov. 22, 2013) (Emerson, Lloyd, Preston) (Ohio tax certificate is a "tax claim" for § 511 purposes, but interest rate is negotiated contract rate—here, .25%—when Chapter 13 plan pays the certificate.).
In re LaMont, 740 F.3d 397, 405-10 (7th Cir. Jan. 7, 2014) (Manion, Kanne, Sykes) (Tax sale purchaser under Illinois law has claim against Chapter 13 debtor that can be modified and paid as a secured debt through plan; property remained in estate, and stay precludes purchaser's efforts to obtain tax deed. "[B]ecause Illinois courts repeatedly call a Certificate of Purchase a lien or a species of personal property . . . , we will not treat it as an executory interest in real property. . . . [D]ebtors' legal or equitable title is not affected by the tax sale. Accordingly, the debtors owned their home and, upon filing their bankruptcy petition, it became property of the bankruptcy estate. . . . [T]he tax purchaser holds a right to payment from the property of the taxpayer. . . . Additionally, [the tax purchaser] holds a 'right to an equitable remedy for breach of performance.' . . . [The tax purchaser's] assertion that the full redemption amount must be paid in a lump sum before the redemption deadline—i.e., that a proper redemption must be made—is mistaken. The plan is treating his secured claim, not formally redeeming the property. The bankruptcy code provides that a Chapter 13 plan may modify a secured claim and pay it over the course of the plan. . . . The expiration of the redemption period did not affect the plan's treatment of [the tax purchaser's] secured claim . . . . [T]he expiration of the redemption period does not affect the validity of the plan or necessitate a modification of the automatic stay so long as the debtors comply with the plan.").
In re Calabrese, 689 F.3d 312 (3d Cir. July 20, 2012) (McKee, Hardiman, Jones) (Retail sales taxes collected by a Chapter 13 debtor as proprietor of a restaurant are nondischargeable trust fund taxes under § 507(a)(8)(C) and § 523(a)(1)(A).).
Michigan Dep't of Treasury v. Hight (In re Hight), 670 F.3d 699, 703, 705 (6th Cir. Mar. 5, 2012) (Martin, Gibbons, Steeh) (State income tax for 2008 was priority claim in case filed in January 2009, under both § 507(a)(8)(A)(i) and (iii); § 507(a)(8)(A)(i) phrase "for which a return . . . is last due . . . after three years before the date of the filing of the petition" is not limited to tax claims arising before commencement of case, but includes "all dates that occur after the date set three years before the filing of the bankruptcy petition, including those that occur after the date of the petition." "The district court correctly interpreted the Bankruptcy Code in finding that § 1305 does not exclusively govern the filing of postpetition claims and that Hight was permitted to file a protective claim under § 501(c) because §§ 502(i) and 507(a)(8) establish that she could treat a postpetition claim for a tax debt arising from the immediately preceding tax year as if it were a prepetition claim."), aff'g 434 B.R. 505, 511 (W.D. Mich. Aug. 10, 2010) (Bell) (Rejecting In re Turner, 420 B.R. 711 (Bankr. E.D. Mich. Dec. 21, 2009) (McIvor), in a Chapter 13 case filed on January 28, 2009, "straddling" tax claim for 2008 income taxes is treated as prepetition claim by §§ 502(i), 507(a)(8) and 1322(a)(2); debtor can file protective proof of claim on behalf of state under § 501(c), notwithstanding § 1305(a)(1). "Debtor's 2008 income tax falls within § 502(i) because it is a claim entitled to priority under § 507(a)(8) that did not arise until after the commencement of the bankruptcy case. Because Treasury has a claim against the estate of a kind specified in § 502(i), Treasury is a 'creditor' as defined in § 101(10)(B). Because Treasury is a creditor, Debtor can file a claim on Treasury's behalf pursuant to § 501(c). This . . . is the same analysis applied by the court in In re Flores, 270 B.R. 203 (Bankr. S.D. Tex. 2001) . . . . This analysis is consistent with the requirement in § 1322(a)(2) that a debtor's plan provide for the full payment of all claims entitled to priority under § 507. . . . Turner's assumption that § 1305(a)(1) governs straddling tax claims is wrong. Turner erroneously assumed that the Code enforced a strict dichotomy between prepetition and postpetition claims. Turner failed to consider the import of §§ 502(i), 507(a)(8) and 1322(a)(2), which establish a Congressional intent to treat taxes on income for the taxable year preceding the bankruptcy case as prepetition claims and to bring those claims into the bankruptcy plan."), aff'g on other grounds 426 B.R. 258, 260-64 (Bankr. W.D. Mich. Mar. 24, 2010) (Hughes) (Citing United States v. Ripley (In re Ripley), 926 F.2d 440 (5th Cir. Mar. 5, 1991) (Brown, Smith, Wiener), and without mention of Joye v. Franchise Tax Board (In re Joye), 578 F.3d 1070 (9th Cir. Aug. 21, 2009) (Wallace, Thomas, Graber), state income taxes for calendar year 2008 are a postpetition claim in a Chapter 13 case filed on January 28, 2009, entitled to priority under § 507(a)(8) and to full payment under § 1322(a)(2); applying §§ 502(i), 501(a) and 501(c), debtor can file protective claim on behalf of taxing authority when state fails to timely file its own proof of claim. "[A] straddling tax liability is a postpetition claim. . . . However, the timing of Ms. Hight's case results in a postpetition claim being included among the tax priority claims that must be [paid in full] . . . . [T]hese apparent contradictions are reconciled by Section 502(i). . . . [T]he State's claim against Ms. Hight for her 2008 income taxes, which clearly arose postpetition but which is nonetheless entitled to Section 507(a)(8) priority status, is to be determined and allowed 'the same as if such claim had arisen before the date of the filing of the petition.' . . . [S]ubpart (B) of Section 101(10)[(A)] expands the definition of creditor to also include claims against the estate 'of a kind specified in section . . . 502(i) . . . .' . . . [N]ot only does Section 1322(a)(2), in conjunction with Section 507(a)(8) and 502(i), compel a Chapter 13 debtor to provide in his plan for straddling postpetition tax claims, but Section 501(a), in conjunction with Section 101(10)(B), also makes it clear that any taxing authority owed such a straddling debt must file a proof of claim in order for it to be paid under the plan. But if the taxing authority is required to file a proof of claim under Section 501(a) for this type of postpetition claim, then it stands to reason that the debtor too may file under Section 501(c) a protective proof of claim for that same debt if the taxing authority does not do so.").
California Franchise Tax Bd. v. Kendall (In re Jones), 657 F.3d 921, 928-29 (9th Cir. Sept. 14, 2011) (Nelson, McKeown, Gould) (Suspension period in unnumbered paragraph in § 507(a)(8) was not applicable during prior Chapter 13 case because some property of estate vested in debtor at confirmation from which FTB could have collected its postpetition tax claim; equitable tolling did not save taxes from discharge in subsequent Chapter 7 case because FTB did not timely avail itself of collection opportunities during prior Chapter 13 case. "[W]e hold that under the plain language of § 1327(b), the property of the estate revests in the debtor upon plan confirmation, unless the debtor elects otherwise in the plan. Because Jones did not elect otherwise, she once again became the owner of her property at confirmation, except as to those sums specifically dedicated to fulfillment of the plan. Accordingly, the FTB was not precluded from collecting the post-petition tax debt from property that revested in Jones upon plan confirmation. . . . Since the tax debt arose after plan confirmation, the FTB could have collected on the debt during the three-year lookback period, and as a result the limitations period is not statutorily suspended. . . . Equitable tolling is not appropriate where a creditor does not timely take the steps available to preserve its claim and where, in fact, the creditor faces no prohibition on asserting its claim during the limitations period."), aff'g on other grounds 420 B.R. 506, 510-17 (B.A.P. 9th Cir. Nov. 24, 2009) (Baum, Dunn, Jury) (Because income taxes for 2002 were not priority claims under § 507(a)(8)(A)(i) in prior Chapter 13 case filed on July 22, 2002, the statutory tolling of the counting periods for priority and nondischargeability added by BAPCPA to § 507(a)(8) for time during which a stay was applicable in a prior case is not available; distinguishing Young v. United States, 535 U.S. 43, 122 S. Ct. 1036, 152 L. Ed. 2d 79 (2002), equitable tolling is also not available because the plan vested property in the debtors at confirmation, and no stay prevented collection of postpetition taxes during prior Chapter 13 case. "BAPCPA added an unnumbered paragraph at the end of Section 507(a)(8) that provides for suspension of the priority time periods under certain conditions . . . . We interpret the phrase 'an otherwise applicable time period' to mean that the tax year at issue falls within the three-year lookback period in a prior case and the subject claim is for a priority tax. . . . An income tax obligation for which the return is due post-petition (here, also post-confirmation) does not meet the priority definition contained in Section 507(a)(8)(A)(i). . . . [A]nd therefore [it] cannot fall within 'an applicable time period' as contemplated by the unnumbered paragraph. The income tax at issue, for the 2002 tax year, was due (based on an extension granted by the FTB) on October 15, 2003. Debtor's Prior Case was filed on July 22, 2002. The three-year lookback period in the Prior Case is July 22, 1999 to July 22, 2002. . . . Since Debtor's 2002 income tax return was due on October 15, 2003, the 2002 income taxes did not fall within the three-year lookback period. . . . [A]nd suspension is inappropriate under Section 507(a)(8)'s unnumbered paragraph. . . . Under the estate termination approach, . . . there was no automatic stay in effect at the time the return was filed. Here, estate property revested in Jones on September 12, 2002, when her Chapter 13 plan was confirmed. When she filed her return on October 15, 2003 . . . there was no estate property for the automatic stay to protect, leaving the FTB free to collect on its tax claim. . . . Based on the facts here, we decline to apply equitable tolling under Section 105.").
United States v. Dawes (In re Dawes), 652 F.3d 1236, 1240-41 (10th Cir. June 21, 2011) (Tymkovich, McKay, Gorsuch) (In a Chapter 12 case, income taxes on postpetition sale of property are incurred by debtors, not by the estate; same result in Chapter 13 with possibility that government would elect under § 1305(a)(1) to include postpetition taxes in plan. "[I]n Chapter 12 and 13 bankruptcies, the debtor—not the bankruptcy estate—bears the sole responsibility for filing and paying post-petition federal income taxes. See 26 U.S.C. § 1399; 26 U.S.C. § 6151(a) . . . . Chapter 13 explicitly allows the government the option of having post-petition taxes incurred by the debtor treated as part of the bankruptcy proceeding and dealt with in the reorganization plan. See 11 U.S.C. § 1305(a)(1).").
Tax Ease Funding, L.P. v. Thompson (In re Kizzee-Jorden), 626 F.3d 239, 243-46 (5th Cir. Nov. 11, 2010) (Jones, Reavley, Haynes) (Third-party lender who pays debtor's ad valorem taxes and receives transfer of tax lien holds a tax claim protected from modification by § 511. "The Bankruptcy Code does not define the term 'tax claim.' . . . Section 511 protects the interest rate due on this 'right to payment' held by governmental entities and by private parties alike because it includes 'creditors' within the realm of those able to make tax claims. . . . [T]he Texas statutory scheme provides . . . the transferee is subrogated to all the rights and remedies of the taxing authorities. . . . Tax Ease, as the transferee of the tax lien, and a subrogee of the taxing authorities' rights, holds a tax claim for purposes of § 511. The district court therefore correctly held that the bankruptcy court could not modify the interest rate due on the claim."), aff'g No. H-09-333, 2009 WL 3186727, at *1 (S.D. Tex. Sept. 28, 2009) (unpublished) (Hughes) (Plan may not lower tax lien creditor's interest rate, since § 511 protects tax lien creditor, including third parties who purchase tax claims; transfer of tax claim does not change nature of claim. "In a bankruptcy, tax claims are preferred to facilitate governments' recovering funds for operating. The law recognizes that the commonwealth is better funded through third parties' accepting the delinquent taxpayer as a credit risk than by their efforts at lending and collecting."), rev'g 399 B.R. 817 (Bankr. S.D. Tex. Jan. 29, 2009) (Isgur) (In re Sheffield, 390 B.R. 302 (Bankr. S.D. Tex. 2008) is not inconsistent with Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991), or Glance v. Carroll, 487 F.3d 317 (6th Cir. 2007): when creditor pays delinquent taxes under Texas law and acquires tax lien, claim is based on a "garden variety promissory note executed by the debtor" and is not entitled to special interest rate in § 511.).
Hardy v. Fink (In re Hardy), 503 B.R. 722 (B.A.P. 8th Cir. Dec. 23, 2013) (Saladino, Nail, Shodeen) (Child Tax Credit portion of income tax refund was not a "public assistance benefit" for purposes of Missouri exemption law.), rev'd, 787 F.3d 1189 (8th Cir. June 2, 2015) (Loken, Murphy, Melloy).).
Latin v. State Bd. of Equalization (In re Latin), No. EC-08-1082-JuMkH, 2009 WL 7751424 (B.A.P. 9th Cir. Feb. 11, 2009) (unpublished) (Jury, Markell, Holloway) (Debt for sales taxes assessed against restaurant business was not personal liability because debtor was not a "responsible person" under California law and debtor was not a corporate officer at the time the taxes were incurred.).
United States v. Daley (In re Daley), 315 F. Supp. 3d 679, 683–84 (D. Mass. Aug. 2, 2018) (Gorton) (Ten percent extraction on early withdrawal from a qualified retirement plan under I.R.C. § 72(t) is a penalty not entitled to full-payment priority in a Chapter 13 case. “[T]he primary purpose of § 72(t) in the context of the Bankruptcy Code is to deter taxpayers from making early withdrawals from qualified retirement plans and not to compensate the government for lost revenue. . . . There is no indication that the government suffered any actual pecuniary loss for which it seeks compensation.”).
Grason v. Illinois Dep’t of Revenue (In re Grason) (In re Grason), No. 17-3129, 2017 WL 3313998 (C.D. Ill. Aug. 2, 2017) (Mills) (In eighth bankruptcy case in nine years, debtor’s appeal of bankruptcy court’s determination of the dischargeability of Illinois income taxes is dismissed for failure to pay filing fee on appeal. Debtor disingenuously claimed to have disposable income for purposes of the Chapter 13 case but to have no disposable income for purposes of a motion to proceed on appeal in forma pauperis.).
Lewis v. IRS (In re Lewis), 557 B.R. 233, 240 (M.D. Ala. Sept. 2, 2016) (Friedman) (Release of federal tax lien did not absolve debtor of liability for $425,000 of income taxes. “[T]he release extinguishes the tax lien, not the tax liability.”).
IRS v. Davis, No. 15-7601 (MAS), 2016 WL 3567039 (D.N.J. June 29, 2016) (unpublished) (Shipp) (District court grants motion for direct appeal to United States Court of Appeals for the Third Circuit of question whether Form 1040 filed late and after the IRS assessed taxes is a “return” for purposes of § 523(a)(1)(B)(i).).
United States v. Kemendo (In re Kemendo), No. H-15-573, 2015 WL 5009219, at *3-*4 (S.D. Tex. Aug. 21, 2015) (Miller) (Summary judgment not appropriate with respect to dischargeability of taxes because facts were in dispute whether substitute returns prepared by IRS were under 26 U.S.C. § 6020(a) or § 6020(b) for purposes of McCoy v. Mississippi State Tax Commission (In re McCoy), 666 F.3d 924 (5th Cir. Jan. 4, 2012) (King, Jolly, Wiener). "Bankruptcy Code § 523(a)(1)(B)([i]) does not allow discharge of taxes for which no return was filed. . . . [T]he term 'return' is defined in an unnumbered hanging paragraph following § 523(a)(19) . . . . Essentially, 'returns filed pursuant to § 6020(a) do qualify as returns for discharge purposes, while those filed pursuant to § 6020(b) do not.' . . . It is disputed whether the substitute tax return was prepared under I.R.C. § 6020(a) or § 6020(b), which under McCoy, determines whether it can be discharged.").
Zajicek v. Burks, Nos. 13 C 50339, 14 C 50044, 2014 WL 1612277, at *1 (N.D. Ill. Apr. 22, 2014) (Reinhard) (Applying In re LaMont, 740 F.3d 397 (7th Cir. Jan. 7, 2014) (Manion, Kanne, Sykes), confirmed plan properly treated Illinois tax sale purchaser as a secured claim holder. "[T]he interest of an Illinois tax purchaser is 'a right to payment or alternatively, a right to an equitable remedy against the debtors' property' and therefore it is a claim that may be treated in a bankruptcy plan. . . . A tax purchaser's claim is secured by the debtor's property. . . . A Chapter 13 plan may modify the rights of holders of such secured claims. . . . Thus, treating appellant's claim under the Chapter 13 plan and providing for installment payments on that claim over the life of the plan and beyond the redemption deadline set by Illinois law, is allowable.").
United States v. Montgomery, 475 B.R. 742, 747 (D. Kan. June 26, 2012) (Murguia) (The "plus 90 days" in unnumbered paragraph following § 507(a)(8) applies only one time when three-year look-back is tolled during several prior bankruptcies. "[T]he phrase 'plus 90 days' applies . . . as a whole, singularly, regardless of the number of prior cases or plans. It would be an unnatural reading of this language to presume that the phrase 'plus 90 days' was meant to be multiplied where multiple prior bankruptcy cases exist. . . . The tolling event is the time during which enforcement of the claim is stayed. Plus 90 days."), aff'g 446 B.R. 475, 477-84 (Bankr. D. Kan. Feb. 7, 2011) (Somers) (Three-year look-back in § 507(a)(8)(A)(i) is tolled for periods during which IRS was subject to automatic stays and to confirmed plan in prior bankruptcy cases plus one 90-day additional period under "suspension paragraph" added by BAPCPA; secured portion of IRS claim for income taxes is entitled to interest determined under nonbankruptcy law pursuant to § 511. Issue was priority status of 2001 income taxes in a Chapter 13 case filed in March of 2010. There were two prior Chapter 13 cases, one of which was converted to Chapter 7 and resulted in a discharge. "[T]he return for Debtors' 2001 income taxes was due on August 15, 2002. The instant Chapter 13 case was filed on March 24, 2010, long after the three-year period expired. However, when the IRS's ability to enforce the tax liability is impacted by the stay of a prior bankruptcy or a confirmed plan, the unnumbered paragraph following § 507(a)(8)(G) . . . may operate to preserve the priority status by altering the method for calculating the three-year lookback period. . . . [T]he unnumbered paragraph after § 507(a)(8)(G) . . . both codified and expanded the rule of [Young v. United States, 535 U.S. 43, 122 S. Ct. 1036, 152 L. Ed. 2d 79 (Mar. 4, 2002)]. . . . [T]he paragraph expressly provides for tolling of the lookback period. It also adds 90 days to the suspension period. . . . In the Suspension Paragraph, the phrase in question is separated from the preceding clause by a comma and it stands independent of the language that precedes it. Thus, the punctuation of the phrase 'plus 90 days' indicates that it should be added to the three-year lookback period after subtraction of the period when the bankruptcy stay was in effect or collection was precluded by a confirmed plan in a prior bankruptcy case. . . . The addition of one 90-day period for each time a bankruptcy stay goes into effect would punish debtors for repeated filings, thereby interfering with their fresh start. . . . This Court interprets the 'plus 90 days' as being applicable only once, after the total number of days of suspension caused by bankruptcy filings is subtracted from the time elapsed between the due date of the tax return and the filing of the bankruptcy case in which priority is an issue. To construe the statute otherwise would not be consistent with the language of the Code or the Congressional balancing of competing interests reflected in the three-year lookback period. . . . If interest is due to the IRS on its secured claim, pursuant to § 511(a), that interest is determined under applicable nonbankruptcy law.").
Michigan Dep't of Treasury v. Senczyszyn (In re Senczyszyn), 444 B.R. 750, 754-61 (E.D. Mich. Feb. 11, 2011) (Cleland) (Rejecting Michigan Department of Treasury v. Hight (In re Hight), 434 B.R. 505 (W.D. Mich. Aug. 10, 2010) (Bell), and United States v. Ripley (In re Ripley), 926 F.2d 440 (5th Cir. Mar. 5, 1991) (Brown, Smith, Wiener), and embracing Joye v. Franchise Tax Board (In re Joye), 578 F.3d 1070 (9th Cir. Aug. 21, 2009) (Wallace, Thomas, Graber), state income taxes for 2008 are a prepetition priority claim in a Chapter 13 case filed in March of 2009; when Michigan failed to timely file a proof of claim, the debtors appropriately filed a claim on behalf of the state under Bankruptcy Rule 3004 and § 501(c). "Relevant here is § 502(i) . . . . Appellant's state income tax claim is entitled to priority under § 507(a)(8) because it is an unsecured claim of a governmental unit for an income tax of a taxable year that ended before the petition was filed and which meets other certain specified criteria. . . . [A] pre-petition tax claim is one filed under § 501, and is so named because it 'arise[s] before the date of the filing of the petition.' . . . Tax claims that arise after the commencement of a case may be included in a bankruptcy pursuant to § 502(i). In addition, in chapter 13 cases, proofs of claim for those taxes that 'become payable . . . while the case is pending' may be filed under § 1305(a)(1). . . . [I]n passing § 1305(a)(1) into law, Congress created an exception to the general means of distinguishing pre-petition claims from post-petition claims, and of filing proofs of claim as set forth in chapter 5. . . . [T]he choice of 'become payable' over 'arise' in subsection (a)(1) was not a mere slip of the pen, because the latter term is utilized in subsection (a)(2), directly juxtaposed to 'become payable.' . . . Congress used the phrase 'become payable' to distinguish the post-petition from the pre-petition in this narrow class of tax claims. . . . [C]ourts that have decided the issue of whether a straddling tax claim is a pre- or post-petition claim appear to have split. Courts have followed at least three different rules, finding the relevant date on which taxes 'become payable' to be either the end of the tax year, the date the tax return was actually filed, or the date the tax return was due. . . . The court finds that taxes 'become payable' in the meaning of § 1305 at the end of a taxable period, typically a year, consistent with Joye . . . . The court does not agree with the Ripley court's reading of Black's Law Dictionary . . . . Congress chose the phrase 'become payable' rather than 'become due and owing' or 'must be paid.' . . . As noted in Joye and [Dixon v. IRS (In re Dixon), 218 B.R. 150 (B.A.P. 10th Cir. Mar. 6, 1998) (McFeeley, Pusateri, Clark)], what congressional record there is supports the notion that 'become payable' in § 1305 references tax obligations that are 'incurred' during the pendency of a bankruptcy case, meaning after the chapter 13 petition has been filed. . . . [T]he tax liability was brought on by earning income during the preceding year. Tax liability is not incurred only after the tax year is over . . . . [T]he ambiguity of the Ripley court in its own holding evinces the practical problem with departing from the natural reading of the statute and adopting the view that taxes 'become payable' when the return is due. Are taxes 'due' on April 15, the deadline for filing a return in most jurisdictions? Or are they 'due' when the return is filed, whether that filing comes early or late? . . . Appellees' tax year ended at the very beginning of January and they filed their chapter 13 petition in March. Their income taxes 'bec[a]me payable' before the petition was filed, and so the claim based on that tax obligation is a pre-petition claim. Section 1305 does not apply. As Appellant failed to timely file a proof of claim, Appellees were permitted, under Rule 3004 and § 501(c), to file the proof of claim on their behalf."), aff'g on other grounds, 426 B.R. 250, 256-58 (Bankr. E.D. Mich. Apr. 7, 2010) (Shefferly) (In a Chapter 13 case filed on March 31, 2009, state income taxes for 2008 are a prepetition priority claim; when state failed to timely file a proof of claim, debtors can file a claim on behalf of state under Bankruptcy Rule 3004, and § 1305 is not a ground to disallow that claim. Distinguishing In re Hight, 426 B.R. 258 (Bankr. W.D. Mich. Mar. 24, 2010) (Hughes), and In re Turner, 420 B.R. 711 (Bankr. E.D. Mich. Dec. 21, 2009) (McIvor), and claiming not to resolve split of authority between Joye v. California Franchise Tax Board (In re Joye), 578 F.3d 1070 (9th Cir. Aug. 21, 2009) (Wallace, Thomas, Graber), and United States v. Ripley (In re Ripley), 926 F.2d 440 (5th Cir. Mar. 5, 1991) (Brown, Smith, Wiener): "[T]here is nothing in § 1305 that provides a basis to disallow a proof of claim filed by a debtor on behalf of a creditor under § 501(c) of the Bankruptcy Code. . . . Section 1305(a)(1) does not define what is and is not a post-petition tax claim. . . . Debtors earned the income for which the taxes are owing in 2008. . . . The Debtors' liability for 2008 income taxes arose out of this pre-petition relationship . . . . [T]he 2008 income taxes owed by the Debtors to the State of Michigan constitute a pre-petition claim. The fact that the Debtors' tax return with the State of Michigan was not due until April 15, 2009 does not change the character of this claim from a pre-petition claim to a post-petition claim, particularly in this case, where the Debtors filed their income tax return on February 14, 2009, weeks before they filed their bankruptcy petition. Nor does the fact that § 1305 permits a governmental unit to file certain types of post-petition claims somehow transform the Debtors' tax liability for income earned during the pre-petition year 2008, into a post-petition claim in their bankruptcy case that was not filed until March 31, 2009. . . . [I]t is not necessary for the Court in this case to try to resolve the split in cases construing § 1305, because § 1305 does not control the issue in this case.").
Berger v. Pennsylvania Dep’t of Rev. (In re Berger), No. 18-02130-GLT, 2019 WL 1458934, at *5–*10 (Bankr. W.D. Pa. Mar. 29, 2019) (Taddonio) (Sovereign immunity does not bar Chapter 13 debtors’ actions to strip down and strip off tax liens held by state of Pennsylvania. State waived sovereign immunity by filing proofs of claim. Inclusion of §§ 506 and 1327 in § 106 is a statutory waiver of sovereign immunity that empowers Chapter 13 debtors to value and then modify liens of state using § 1322(b)(2) through confirmed plans. Alternatively, lien stripping is an in rem proceeding that does not trigger sovereign immunity concerns in the first instance. “Instead of relying on § 506(d)’s lien-voiding language, the chapter 13 debtor ‘modif[ies] the rights of holders of secured claims’ via § 1322(b)(2), stripping the lien by addressing it in their plan of reorganization. . . . Revenue did in fact file proofs of claim in both debtors’ cases. . . . By doing so, Revenue subjected itself to the claims allowance process and any subsequent determination as to the nature and extent of its claims . . . . The proofs of claim and the adversary complaints arise out of the same ‘transaction or occurrence,’ and Revenue has therefore waived its sovereign immunity with respect to the debtors’ complaints. . . . [T]he Court alternatively finds that sovereign immunity was abrogated by Congress pursuant to § 106(a). . . . While Revenue is correct in stating that § 1322 is not listed among the provisions of § 106(a), its inclusion would be entirely obviated by the inclusion of § 1327. Section 1327 is an enabling clause; if sovereign immunity has been abrogated with respect to the power to bind creditors to the terms of a confirmed plan, then § 1322’s provisions detailing the components of a plan are subsumed within that abrogation to give effect to § 1327’s inclusion. . . . Lien stripping is nothing more than a determination of the rights in a debtor’s res, in exactly the same way as the discharge of student loan debt in [Tennessee Student Assistance Corp. v. Hood), 541 U.S. 440, 124 S. Ct. 1905, 158 L. Ed. 2d 764 (May 17, 2004)] and the avoidance of a preferential transfer in [Central Va. Comty. College v. Katz), 546 U.S. 356, 126 S. Ct. 990, 163 L. Ed. 2d 945 (Jan. 23, 2006)]. Indeed, the assessment and modification of liens against estate assets is the quintessential in rem proceeding, much more so than the actions evaluated by the Supreme Court in those two cases.”).
In re Huenerberg, 590 B.R. 862, 868–71 (Bankr. E.D. Wis. Sept. 28, 2018) (Halfenger) (Applying National Federation of Independent Business v. Sebelius, 567 U.S. 519, 539, 132 S. Ct. 2566, 183 L. Ed. 2d 450 (June 28, 2012), shared responsibility payment imposed under Affordable Care Act for failure to comply with individual mandate is not a penalty but it is not entitled to priority under § 507(a)(8) because it is not an excise tax on a transaction. “Under National Federation, the shared responsibility payment does not fall within Reorganized CF & I Fabricators’ ‘penalty’ model as ‘punishment for an unlawful act or omission’. . . . To prevail, the IRS must also establish not only that the shared responsibility payment is a tax for purposes of § 507(a)(8) but also that the payment is an ‘excise tax’ under § 507(a)(8)(E). . . . The shared responsibility payment is not a tax on the manufacture, sale, or use of goods or on an occupation or activity. It is a payment owed by ‘individuals precisely because they are doing nothing’. . . . [O]nly by embracing an expansive construction of ‘excise tax’ can one conclude that the shared responsibility payment is such a tax. Narrowly construed, § 507(a)(8)(E), which grants priority status to claims for excises, does not encompass the IRS’s claim for a debtor’s unremitted shared responsibility payment. . . . [E]ven if ‘excise tax’, for purposes of § 507(a)(8)(E), were broad enough to encompass the shared responsibility payment, that subparagraph only grants priority status to ‘claims . . . for . . . an excise tax on . . . a transaction’. . . . [I]t offers no definition of ‘transaction’ that reasonably encompasses an individual’s unilateral and solitary decision not to act. . . . Narrowly construed, as it must be, § 507(a)(8)(E), which grants priority to claims for an excise on a transaction, cannot reasonably be read to bring within its scope the IRS’s claim for an unremitted shared responsibility payment[.]”).
In re Walker, No. 17-36804 (CGM), 2018 WL 3752995, at *2–*4 (Bankr. S.D.N.Y. Aug. 6, 2018) (unpublished) (Morris) (Undersecured federal tax lien on real and personal property cannot be voided under § 506(d) but it can be bifurcated under § 506(a); the tax lien is not protected from modification by § 1322(b)(2), the lien can be bifurcated into secured and unsecured components, and the plan can pay the secured part consistent with § 1325(a)(5). Debtor moved to “strip down” a federal tax lien against personal property. “Dewsnup v. Timm, 502 U.S. 410[, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992)], foreclosed § 506(d)’s application as a statutory basis to void a creditor’s lien. . . . Section 506(d) now serves the reduced function of voiding a lien only when the claim it secures has not been allowed. . . . While Dewsnup foreclosed a debtor’s ability to ‘strip down’ a secured creditor’s lien under § 506(d), chapter 13 debtors are still able to modify a secured creditor’s lien through § 506(a) and a plan of reorganization. . . . While 26 U.S.C. § 6321 confers upon the IRS a single lien on all of a debtor’s real and personal property for nonpayment of taxes, the IRS is not afforded any added protection or special status that guards against modification of a creditor’s lien rights through a chapter 13 plan. . . . The antimodification provision [in § 1322(b)(2)] was enacted to protect mortgagees, not a government agency such as the IRS. . . . As Claim No. 2-1 filed by the IRS is secured by the Debtors’ real and personal property in this case, it is not subject to the anti-modification exception that protects mortgagees. For this reason, the Court finds that Claim No. 2-1 may be bifurcated into secured and unsecured claims pursuant to 11 U.S.C. § 506(a). . . . [T]he underlying tax lien is subject to modification under 11 U.S.C. §§ 1322(b)(2) and 1325.”).
In re Donaldson, 586 B.R. 822 (Bankr. N.D. Miss. July 2, 2018) (Woodard) (Chapter 13 debtor has “responsible person” liability for nonpayment of trust fund taxes by nonprofit corporation with respect to which debtor was director and officer at time trust funds were not paid to IRS. Bankruptcy court lacks jurisdiction to require IRS to reallocate payments by corporation to pay trust fund liabilities rather than other taxes.).
In re Parrish, 583 B.R. 873, 881 (Bankr. E.D.N.C. Apr. 6, 2018) (Humrickhouse) (The “individual shared responsibility payment” imposed for failure to obtain health insurance under the Affordable Care Act is a penalty, not a tax, and is not entitled to priority in a Chapter 13 case. “[T]he most natural reading, for purposes of the Bankruptcy Code, is that the ISRP is a penalty. . . . [T]hat the amount of the ISRP is calculated with reference to the debtor’s income does not make it an income tax, as its assessment is not dependent on income, it is dependent upon the failure to purchase health insurance. . . . Taken together with the primary purpose of the ISRP, to encourage people to buy insurance by penalizing those who do not, the court determines that the ISRP is a penalty for purposes of § 507(a) of the Bankruptcy Code.”).
In re Nora, 581 B.R. 870 (Bankr. D. Minn. Feb. 26, 2018) (Sanberg) (Debtor, an experienced tax and bankruptcy attorney, failed to prove casualty loss of $62,500 based on boxes of client records that disappeared after office was foreclosed upon and sheriff evicted debtor.).
In re Domenech, No. 13-04142 (ESL), 2018 WL 851277 (Bankr. D.P.R. Feb. 13, 2018) (Lamoutte) (Material disputed facts preclude summary judgment with respect to whether debtor was responsible person for withholding and payment of trust fund taxes for a corporation in tax years 2000
In re Chesteen, No. 17-11472, 2018 WL 878847, at *1–*3 (Bankr. E.D. La. Feb. 9, 2018) (Brown) (IRS extraction for failure to purchase health insurance under Affordable Care Act is a penalty, not a tax for § 507(a)(8) purposes. “[T]he IRS describes this ‘excise tax’ as the debtor’s ‘shared responsibility payment liability [arising] under Internal Revenue Code § 5000A’ for failure to maintain health insurance in 2016. . . . [I]t is apparent that the ACA individual mandate is a penalty designed to deter citizens from living without health insurance. . . . Failure to make the ACA individual mandate payment does not result in any of the typical consequences that result from non-payment of taxes . . . . Rather, an individual who fails to make the ACA individual mandate payment is penalized by having the exaction deducted out of future tax returns. . . . Congress itself labeled the ACA individual mandate a ‘penalty’ and not a tax. . . . [I]t cannot be said that the ACA individual mandate is an exaction imposed for the purpose of supporting the government. Congress’s primary, or dominant, purpose of imposing the individual mandate of the ACA was not to support or fund the government fiscally, but to discourage Americans from living without health insurance coverage. . . . [I]t is not a ‘tax’ within the meaning of § 507(a)(8).”).
In re Villasenor , No. 17 B 15830, 2017 WL 6205379, at *2–*5 (Bankr. N.D. Ill. Dec. 6, 2017) (Schmetterer) (Twelve percent “statutory penalty” is proper interest rate for claim of tax purchaser at Illinois property tax sale. “[T]he treatment of tax liens in bankruptcy are [sic] governed by 11 U.S.C. [§] 511(a). . . . For the purposes of section 511(a), the applicable nonbankruptcy law to be applied will be Illinois law. . . . Fair Deal is entitled to the 12% penalty rate prescribed by [Illinois law], but only as to a portion of its claim. . . . [P]ursuant to [Illinois law], the 12% penalty rate . . . only applies to ‘each year or portion thereof intervening between the date of that payment and the date of redemption,’ and it does not compound yearly and is, in fact, a flat 12% per annum rate.”).
Gunsalus v. Ontario Cty., N.Y., No. 17-2008-PRW, 2017 WL 5157425, at *1 (Bankr. W.D.N.Y. Nov. 6, 2017) (Warren) (“[A] judicially supervised tax foreclosure action conducted by the County in full compliance with New York’s Article 11 RPTL is entitled to the presumption of having provided reasonably equivalent value for purposes of 11 U.S.C. § 548(a)(1)(B)(i)[.]” BFP v. Resolution Trust Corp., 511 U.S. 531, 114 S. Ct. 1757, 128 L. Ed. 2d 556 (May 23, 1994), is properly extended in a Chapter 13 case to noncollusive, properly conducted prepetition tax foreclosure sale.).
Hackler v. Arianna Holding Co. (In re Hackler), 571 B.R. 662 (Bankr. D.N.J. Aug. 28, 2017) (Gavelle), aff'd, 588 B.R. 394 (D.N.J. Mar. 22, 2018) (Sheridan) (Distinguishing BFP v. Resolution Trust Corp., 511 U.S. 531, 114 S. Ct. 1757, 128 L. Ed. 2d 556 (May 23, 1994), transfer of real property pursuant to Pennsylvania tax foreclosure sale within 90 days of Chapter 13 petition was an avoidable preference under § 547.).
Forrester v. IRS (In re Forrester) (In re Forrester), No. 16-65-JCO, 2017 WL 3588744, at *2
In re Curley, 572 B.R. 622, 626-37 (Bankr. E.D. La. July 7, 2017) (Magner) (Purchaser at Louisiana property tax sale is not a creditor and cannot be bound by plan that redeems property on terms different from those permitted by state law. Purchaser is entitled to relief from stay to complete tax certificate process. Debtors’ failure to list purchaser for notice purposes is due process violation. Confirmed plan proposed to pay city its priority tax claim in full with interest. Property had been sold before the petition at a tax sale and purchaser was not listed as a creditor nor given notice of the plan before or after confirmation. “A plan may force a creditor to accept payment to cure a default over time. However, it may not adjust the rights of a third party who is not a creditor of the estate . . . . Because only a creditor with an allowed claim may receive distributions under a Chapter 13 plan, . . . it is inappropriate for a debtor to place payments to a non-creditor into a plan. By virtue of the Tax Sale, AP became the 70% owner of [the debtor’s property]. . . . AP’s payment of taxes after the Tax Sale extinguished Debtors’ obligation to the City. . . . When AP purchased [the property], it did not purchase Debtors’ obligation to the City. Instead, it obtained a right to [the property’s] title, assuming Debtors did not exercise their right to redeem. . . . Debtors were under no obligation to exercise the redemptive right and owed no obligation to AP if they did not redeem. Nor could AP force Debtors to redeem or waive their right of redemption. . . . The Tax Sale was completed prior to the Petition Date. Because the Tax Sale was complete, the tax obligation was satisfied. What remained was Debtors’ right of redemption. That right burdened AP’s ability to obtain title, but did not create an enforceable right to payment in favor of AP because as of the Petition Date, Debtors had not yet exercised their right to redeem. . . . AP has no ‘right to payment’ from Debtors or ‘claim’ pursuant to section 101(5) because under Louisiana law, Debtors had the right, but not the obligation, to redeem [the property]. . . . Because AP was not a creditor but held an interest in property of the Debtors’ estate, it was a party in interest to this case. . . . Despite [In re LaMont, 740 F.3d 397 (7th Cir. Jan. 7, 2014) (Manion, Kanne, Sykes)]’s holding, this Court can find no support for the permanent modification of a third party noncreditor’s rights under state law through a plan. . . . A Chapter 13 Plan is not binding on third parties. . . . Even if AP was a creditor, a Chapter 13 plan is only binding on creditors who received notice. . . . [T]he City’s rights were unaffected by the Plan . . . because the City had already been paid in full. Debtors attempted to obtain, through confirmation, a material change in AP’s rights. . . . Debtors’ failure to notice AP cannot be maintained, for certainly this was an attempt to make a taking without due process. . . . [I]t was improper for Debtors to list redemption payment to the City as a Plan term. Instead, Debtors were obligated to perform as required by law. . . . [T]his Court declines to follow the reasoning of [In re Pittman, 549 B.R. 614 (Bankr. E.D. Pa. May 6, 2016) (Chan)]. . . . What [In re Jimerson, 564 B.R. 430 (Bankr. N.D. Ga. Jan. 27, 2017) (Baisier)], [Prado v. Cash America Advance, Inc. (In re Prado), 340 B.R. 574 (Bankr. S.D. Tex. Mar. 31, 2006) (Isgur)], and Pittman all have in common is the fact that the property remained property of the estate, and the right to redeem was against each of the debtors’ creditors. This Court believes that these facts lead the courts to conclude that a ‘cure’ of the default or extension of the redemptive period was justified. . . . [T]his Court respectfully disagrees. . . . While the automatic stay prevents AP from taking steps to quiet title, it does not stay the redemptive period. . . . Because the redemptive period expired without Debtors redeeming [the property], the Court will grant AP’s Motion for Relief from the Automatic Stay so that it may proceed to confirm the Tax Sale.”).
In re Keating, No. 2:16-bk-14882-WB, 2017 WL 2533338 (Bankr. C.D. Cal. June 9, 2017) (unpublished) (Brand) (Frivolous objections to IRS claim by tax protestor are rejected.).
In re Rice, No. 13-57587, 2016 WL 4574301, at *2 (Bankr. E.D. Mich. Sept. 1, 2016) (Randon) (Four percent “administration fee” required by Michigan law with respect to delinquent property taxes transferred to the county treasurer is not an allowable addition to the county’s tax claim when the confirmed plan pays the property taxes with 12% interest only; confirmed plan was binding on the county as the transferee of taxes and county could not add the administrative fee that was not provided for by the confirmed plan. With respect to § 511 of the Bankruptcy Code, “[t]his section does not apply to the County’s claim because the four percent is an administration fee—not the payment of interest on the tax claim. . . . The County simply stepped into the shoes of the City and is, therefore, bound by the provisions of the confirmed plan. . . . [S]ection 1327(a) prohibits the County from adding the administration fee post-confirmation. . . .").
In re Serrano, 545 B.R. 447 (Bankr. D.P.R. Feb. 3, 2016) (Lamoutte) (Debtor is personally liable under Puerto Rico law for 100% penalty for trust fund taxes not paid by corporation in which debtor was president and owner.).
In re Trojanowski, No. 14-06078-5-DMW, 2015 WL 5553747 (Bankr. E.D.N.C. Sept. 18, 2015) (Warren) (Debtor overcame IRS adjustments to tax claim with testimony that all child support payments were made as required during 2010; payments to mortgagee with respect to property equitably owned by former spouse did not benefit debtor and were deductible alimony for purposes of calculating tax claim.).
Bradford v. United States Dep't of the Treasury (In re Bradford), 534 B.R. 839 (Bankr. M.D. Ga. July 19, 2015) (Carter) (Agreeing with United States v. Dumler (In re Cassidy), 983 F.2d 161 (10th Cir. Dec. 7, 1992) (McKay, Seth, Brorby), IRS claim under IRC § 72(t) for early withdrawal of funds from an Individual Retirement Account was neither a tax nor a penalty in compensation for actual pecuniary loss under § 507(a)(8); claim was not entitled to priority.).
In re Minor, 531 B.R. 564 (Bankr. E.D. Pa. June 9, 2015) (Coleman) (Plan can redeem residence from tax sale by paying purchaser of tax claim the redemption amount with interest over life of plan.), aff'd, No. 15-3562, 2016 WL 1256286, at *14 (E.D. Pa. Mar. 30, 2016) (Rufe).).
In re Fielding, No. 13-43212-DML-13, 2015 WL 1676877 (Bankr. N.D. Tex. Apr. 10, 2015) (Lynn) (Applying United States v. Energy Resources Co., 495 U.S. 545, 110 S. Ct. 2139, 109 L. Ed. 2d 580 (May 29, 1990), Chapter 13 plan can direct how proceeds from sale of property are applied by IRS; even if Energy Resources does not apply, Chapter 13 plan payments are "voluntary" and can be directed by debtor to payment first of secured and priority taxes.), amending and superseding 522 B.R. 888, 891-99 (Bankr. N.D. Tex. Dec. 31, 2014) (Lynn) (Applying United States v. Energy Resources Co., 495 U.S. 545, 110 S. Ct. 2139, 109 L. Ed. 2d 580 (May 29, 1990), Chapter 13 plan can allocate proceeds from sale of property to secured and priority portions of IRS claim because allocation is necessary to feasibility of plan. In alternative holding, payments to IRS through Chapter 13 plan are "voluntary" and debtors can designate to which portions of tax debt payments must be credited by IRS. "In 1990, the Supreme Court held that a bankruptcy court had authority to order the IRS to apply tax payments made by chapter 11 debtor corporations as designated by such debtor corporations, when the designation was necessary to effectuate a successful reorganization. United States v. Energy Res. Co., Inc., . . . . [T]he Amended Plan provides that 'Debtors intend to sell assets against which IRS has a lien in order to pay the secured and priority claims of IRS.' . . . Energy Resources applies more broadly to cases with plans of reorganization. . . . [C]ase law defining and applying the 'necessary' standard in accordance with Energy Resources is sparse. . . . If the IRS is permitted to apply the Proceeds to unsecured or priority portions of the debt as requested, then the lien held by the IRS for the secured claim would continue to attach to Debtors' property. Thus, any reduction in the IRS secured claim would not sufficiently correspond with the assets being sold. Debtors would also continue to incur the interest and penalties on the unpaid, secured portion of the debt, further decreasing the Plan's feasibility. . . . [T]o apply the Proceeds in the manner suggested by the IRS would potentially lead to a ceaselessly accumulating claim against Debtors for interest and penalties, while simultaneously leaving Debtors without assets to assist in payment of the accumulating claim. . . . Debtors may apply the Proceeds to the IRS debt at their discretion because it is necessary to the effective reorganization in the Case. . . . Debtors have voluntarily proposed to pay the IRS with the Proceeds. To categorize such a payment as involuntary would not only go against the very definition of the word, it would also go against the very nature of a chapter 13 proceeding.").
Latimer v. Lake Cnty. Treasurer (In re Latimer), 528 B.R. 166, 167-70 (Bankr. N.D. Ind. Apr. 2, 2015) (Klingeberger) (In Chapter 13 case filed on April 22, 2013, Indiana tax amnesty that required payment by July 1, 2013, could not be used by Chapter13 debtor to avoid tax penalty and interest. "The problem is that the payment deadline provided by the amnesty statute expired on July 1, 2013. . . . 11 U.S.C. § 1322(b)(2) cannot be used to modify the terms of statutory compliance as established by the state legislature . . . the amount due must be paid in full by July 1, 2013. . . . What Latimer is attempting to do is not to modify a secured claim under § 1322(b)(2), but to modify the amount of the claim by modifying the amnesty statute. The amount owed to the County is determined exclusively by state law, and the County's claim on the petition date can only be reduced by complying with the amnesty statute.").
Kennedy v. Mississippi Dep't of Revenue (In re Kennedy), 529 B.R. 345, 349-50 (Bankr. N.D. Ga. Mar. 31, 2015) (Diehl) (Bankruptcy court lacks jurisdiction to determine validity of tax assessments because debtor contested amount and validity before Mississippi Tax Board for purposes of § 505(a)(2)(A). "Section 505(a)(1) grants the Bankruptcy Court the ability to 'determine the amount or legality of any tax, . . . whether or not contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction.' . . . [T]his power is limited by Section 505(a)(2)(A). The Court does not have the ability . . . ' . . . if such amount or legality was contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction before the commencement of the case under this title.' . . . Here, [debtor] did not attend the scheduled hearing, and that resulted in an involuntary withdrawal of the appeal. . . . Because the decision is final under Mississippi law, this Court has no jurisdiction over [debtor's] challenge to the Assessments.").
In re Jara, No. 14-80057-G3-13, 2015 WL 542408 (Bankr. S.D. Tex. Feb. 5, 2015) (Paul) (Full payment of criminal restitution pursuant to guilty plea agreement with IRS does not preclude criminal restitution assessment for interest and other charges in subsequent Chapter 13 case.).
In re Mikels, 524 B.R. 805 (Bankr. S.D. Ind. Feb. 4, 2015) (Lorch) (Innocent spouse relief is not available under 26 U.S.C. § 6015(c) when there has not been an assessment of tax deficiency by the IRS; bankruptcy court lacks jurisdiction to review innocent spouse determination by IRS under 26 U.S.C. § 6015(f).).
In re Donahue, 520 B.R. 782, 784-87 (Bankr. W.D. Mo. Oct. 27, 2014) (Federman) (Property taxes for 2013 were "incurred" for § 507(b)(8)(B) purposes on January 1, 2013, and are a priority claim in a Chapter 13 case filed on April 30, 2013; property taxes for 2013 are not administrative expenses under § 503(b)(1)(B), and § 1305 does not prohibit debtors from filing a claim on behalf of taxing authority under § 501(c). "[W]hile the Debtors would be liable for taxes on any property they owned on January 1, 2013 (before the petition was filed), those taxes did not 'become payable' until after the mill rate, and thus the actual tax amount, was determined in the fall of 2013. The tax bills were sent in November, 2013, and the taxes were last payable without penalty on December 31, 2013 . . . . Thus, it seems to be undisputed that the 2013 tax obligation 'became payable . . . while the case is pending,' as that phrase is used in § 1305. . . . [S]ince Platte County has chosen not to file a claim for the 2013 taxes under § 1305, the Debtors cannot rely on that provision to require the 2013 taxes be paid through the Plan. That said, if the 2013 taxes are a prepetition priority claim under § 507(b)(8)(B), as opposed to a postpetition administrative claim under § 503(b)(1)(B), then the Debtors need not rely on § 1305 to treat the claim through the Plan. Section 503(b)(1)(B) provides that there shall be allowed administrative expenses for any tax 'incurred by the estate, . . . including property taxes . . . except a tax of a kind specified in section 507(a)(8) of this title.' . . . Section 507(a)(8) gives priority treatment to 'allowed unsecured claims of governmental units, . . . for . . . a property tax incurred before the commencement of the case and last payable without penalty after one year before the date of the filing of the petition.' . . . There is no dispute that the taxes at issue here are 'property taxes.' Further, since the taxes were 'last payable without penalty' on December 31, 2013, they were 'last payable without penalty after one year before the date of the filing of the petition.' . . . 'The Bankruptcy Code does not define when a property tax obligation is "incurred."' . . . [T]he determination of when a state tax is 'incurred' is governed by state law. . . . [A]s part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Congress changed the word 'assessed' in § 507(b)(8)(B) to 'incurred,' . . . . The critical date, then, is when the Debtors became liable for payment of the 2013 taxes under Missouri law. . . . Under [Missouri law,] regardless of the fact that the amount of the tax is not known, and thus the tax bill cannot as a practical matter be paid, before the fall of a given year, the owner of real or personal property on January 1 becomes 'liable' for the taxes due for that year, whatever they may turn out to be. It is, in effect, a contingent and unliquidated claim incurred on January 1[.] . . . [U]nder Missouri law, the Debtors became contingently liable for the 2013 taxes on January 1, 2013. The claim for the 2013 taxes was thus incurred for these purposes on that date. It is, therefore, a priority prepetition claim under § 507(a)(8), and not an administrative claim under § 503(b)(1)(B). . . . Debtors are not prohibited from proposing a Plan which provides for the payment of the 2013 taxes as a priority claim through the Plan. . . . [B]ecause this is a prepetition claim under §§ 507(b)(2)(B) and 502(i), as opposed to a postpetition claim, 'there is nothing in § 1305 that provides a basis to disallow a proof of claim filed by a debtor on behalf of a creditor under § 501(c) of the Bankruptcy Code.'").
In re Carlin, No. 11-11784 (ALG), 2014 WL 5023653, at *2-*3 (Bankr. S.D.N.Y. Oct. 7, 2014) (Gropper) (In Chapter 13 case filed in 2011, income taxes for 2008 are nondischargeable under BAPCPA amendments to § 1328(a)(2) when 2008 return was filed late and within two years of current petition. IRS permitted to withdraw late-filed proof of claim under Bankruptcy Rule 3006. "Carlin filed his 2008 tax return after its due date and after April 18, 2009—two-years prior to the petition date. This is the type of tax rendered non-dischargeable in a chapter 13 case by the 2005 amendment to § 1328. . . . [T]here is no authority that a non-dischargeable claim has to be filed in a chapter 13 case or that it will lose its status as non-dischargeable because a chapter 13 debtor refers to the liability in the petition. . . . The question remains whether the IRS should be allowed to withdraw its untimely proof of claim. The governing rule is Bankruptcy Rule 3006, . . . an objection to a claim has been filed . . . . [B]ut Carlin has identified no reason why the IRS should not be able to withdraw its non-dischargeable claim. . . . [T]he Court has no authority to allow a late proof of claim in a chapter 13 case. . . . The filing of a late proof of claim for a debt that is non-dischargeable is not a catch-22 that causes the debt to be dischargeable. Thus, the IRS may withdraw its proof of claim.").
In re Ange, No. 11-20597, 2014 WL 2565916, at *5-*6 (Bankr. N.D. Ohio June 6, 2014) (Harris) (Holder of real estate tax certificate under Ohio law is a secured creditor not protected from modification by § 1322(b)(2); plan could have provided for present value with interest at state law rate under § 511, but ambiguous language of this plan did not modify the certificate holder's right to accrue interest on the entire purchase price of the certificate—including paid and unpaid portions. "As a tax certificate holder, CapitalSource has a secured claim that is secured only by real property that is the debtor's principal residence; however, CapitalSource does not have a security interest, as defined by the Bankruptcy Code. . . . The antimodification language contained in § 1322(b)(2) is inapplicable . . . . [T]he debtor could have proposed making installment payments equal to the present value of the secured claim as of the effective date of the plan under 11 U.S.C. § 1325(a)(5)(B). The present value would presumably require an interest rate equal to the rate provided under state law. See 11 U.S.C. § 511. In this case, however, the debtor's confirmed Chapter 13 plan does not modify CapitalSource's claim.").
In re Slade-Lanier, Nos. 12-13436, 13-4328, 2014 WL 2565919, at *6 (Bankr. N.D. Ohio June 6, 2014) (unpublished) (Harris) (Section 505(a)(2) does not prohibit bankruptcy court from hearing objections to claims of tax certificate purchasers. "[T]he Court is not determining 'the amount or legality of any amount arising in connection with an ad valorem tax' by ruling on the debtors' claim objections. . . . Section 505 precludes a bankruptcy court from determining the amount of an ad valorem tax, but it does not prevent a bankruptcy court from determining the amount of a tax claim, including tax claims which are ad valorem in nature. . . . [T]he plain language of 11 U.S.C. § 505(a)(2)(C) refers to determining the amount owed on an ad valorem tax, not determining the allowed amount and treatment of a tax claim.'").
Putnam v. IRS (In re Putnam), 503 B.R. 656 (Bankr. E.D.N.C. Jan. 14, 2014) (Humrickhouse) (Two-year look-back in § 523(a)(1)(B)(ii) tolled during pendency of debtor's prior cases; tax liability on untimely returns filed during first of three cases not discharged.).
In re Thompson, No. 13-11527, 2013 WL 6834616, at *2 (Bankr. W.D. Wis. Dec. 23, 2013) (Martin) (Three-year look-back in § 507(a)(8)(A)(i) was tolled during prior bankruptcy case pursuant to unnumbered paragraph at end of § 507(a)(8). "[D]ebtor's 2007 tax return was last due on April 15, 2008. The debtor filed her first bankruptcy petition on May 6, 2010-two years and 21 days after her 2007 tax return was last due. This period is tolled with the 35 days between the time the first bankruptcy case was dismissed and the second bankruptcy petition was filed . . . , for a total of 2 years and 56 days. This is within the three year 'lookback' period. Thus, the department has a valid priority tax claim for 2007, 2008, and 2009.").
In re Varquez, 502 B.R. 186, 192 (Bankr. D.N.J. Dec. 13, 2013) (Wizmur) (Holding in BFP v. Resolution Trust Corp., 511 U.S. 531, 114 S. Ct. 1757, 128 L. Ed. 2d 556 (June 27, 1994)—that "the price achieved at a regularly conducted, properly noticed foreclosure sale conclusively establishes that price as the reasonably equivalent value for the property" under § 548(a)(1)(B)—does not apply "in the context of a transfer, under the New Jersey Tax Sale Law, of title to property from a debtor to a tax sale certificate holder upon the entry of a judgment of possession. . . . [T]he acquisition of free and clear title to property by a tax sale certificate holder through the foreclosure of a debtor's equity of redemption involves no sale, no notice requirements to third parties, no auction procedures, and no other exposure to the marketplace in any way.").
In re Mazzarella, No. 13-61819, 2013 WL 6051036, at *2-*3 (Bankr. N.D. Ohio Nov. 15, 2013) (Kendig) (Suspension period in unnumbered paragraph of § 507(a)(8) does not apply when debtor and taxing authority agree to a prepetition payment arrangement. "The statute is quite specific in outlining when tolling is permissible. . . . In the face of the statute's specificity, the court has no basis to allow suspensions of the lookback period for reasons not included in the statute. From a policy standpoint, it is easy to understand that a governmental unit should not be penalized for a time period in which it is prohibited from collecting. . . . The City's voluntary, temporary relinquishment of rights to enforce collection through other legal means is not commensurate with an inability to collect. Additionally, one noted precept of § 507(a)(8) is to 'balance three competing interests: those of general creditors, the debtor, and the tax collector.' . . . Allowing the City to use the agreement to toll the statute unfairly tips the balance in favor of City. . . . Allowing the lookback period to be tolled for this period of time would allow the City to maintain its priority position over the general unsecured creditors for, in some instances, three times longer than normal. The consequence is that government units must apply payments to the oldest taxes and not extend plans beyond the payment period or they lose priority status. . . . [T]he repayment agreements between City and Debtor did not toll the three year lookback period in 11 U.S.C. § 507(a)(8)(A)(i).").
In re Whitson, No. 12-15000, 2013 WL 5965745, at *7 (Bankr. E.D. Tenn. Nov. 7, 2013) (Rucker) (Erroneously refunded Earned Income Tax Credit and Child Tax Credit were priority tax claims for purposes of §§ 507(a)(8) and 507(c). "[D]ebtor's EITC and CTC both relate to a tax pursuant to Section 507(c) because they are based on the debtor's erroneous claims of deductions to which she was not entitled. The IRS discovered the debtor's error, not its own accounting or clerical error, due to the audit that it conducted on the debtor's tax return. The debtor was not entitled to the EITC and CTC claimed . . . . The IRS issued a deficiency notice and its claim is an effort to collect an erroneously paid refund. . . . [T]he EITC and the CTC at issue on the debtor's 2008 tax returns are taxes or are related to taxes pursuant to 11 U.S.C. §§ 507(a)(8) and 507(c).").
In re Reed, 500 B.R. 564, 568 (Bankr. W.D. Wis. Oct. 29, 2013) (Martin) (When petition is filed before final day of tax year, tax liability is postpetition liability. "[T]he definiteness of tax liability simply cannot be determined before the last day of the tax period." Proration may be allowed in appropriate cases where income has not fluctuated widely from month to month.).
In re Curry, No. 12-26201, 2013 WL 5493415 (Bankr. D.N.J. Oct. 2, 2013) (Winfield) (Interest on purchased tax claim is calculated under state law pursuant to § 511, including use of 360-day year.).
In re Tilen-Bernabe, 499 B.R. 241, 245 (Bankr. D.P.R. Oct. 2, 2013) (Godoy) (Assuming payment plan between debtor and Commonwealth was an "offer in compromise" for tolling purposes under § 507(a)(8)(A)(ii)(I), notice of garnishment upon default did not extend tolling and tax debt was not entitled to priority. "The Payment Plan terminated . . . when [debtor] stopped making the required monthly payments . . . . [T]here was no offer in compromise 'pending or in effect' during the 270 days prior to the bankruptcy filing. Thus, the tolling provision of section 507(a)(8)[(A)](ii)(I) is not triggered and . . . [claim] is not entitled to priority treatment under section 507(a)(8).").
In re Berry, No. 12-24246 jpk, 2013 WL 4517171 (Bankr. N.D. Ind. Aug. 6, 2013) (Klingeberger) ("Government docket fees" imposed by Indiana law when support or maintenance is paid through the clerk or a central collection unit are not excise taxes for purposes of § 507(a)(8)(E)(ii).).
In re Peterson, No. 10-23429 (ASD), 2013 WL 3965307 (Bankr. D. Conn. Aug. 1, 2013) (Dabrowski) (Attorney fees and costs associated with postpetition foreclosure by assignee of secured property tax claim are disallowed. Claim allowed only in amount of original tax lien.).
In re Debenedetto, No. 10-14103, 2013 WL 3831062, at *2-*5 (Bankr. N.D.N.Y. July 23, 2013) (Littlefield) (Purchaser of tax lien under New York law is a "creditor" holding a "tax claim" entitled to statutory interest at state rate of 21% under § 511(a). "There is a clear consensus among the courts construing the term 'creditor' in § 511(a) that it encompasses both governmental and private entities. . . . ATF holds a 'tax claim' pursuant to § 511(a) because the underlying tax debts owed by Debtors were not dissolved at the time of ATF's payment to the City for the tax liens, and ATF, as the purchaser of the tax liens, enjoys substantially the same rights held by the City prior to sale.").
In re Bliss, No. 12-51105, 2013 WL 3285834 (Bankr. W.D. La. June 27, 2013) (Summerhays) (Sales and use tax claim that included penalties for failure to timely pay was not entitled to priority.).
In re Digiacinto, No. BK-N-12-52663-btb, 2013 WL 3279159 (Bankr. D. Nev. June 26, 2013) (Beesley) (Claim filed by Nevada Division of Industrial Relations did not qualify as excise tax and was not entitled to priority.).
In re Curry, 493 B.R. 447, 450 (Bankr. D.N.J. May 21, 2013) (Winfield) (Purchaser of delinquent tax certificate is entitled to interest at rate applicable under New Jersey law. "Congress enlarged the reach of the statute by use of the more expansive term 'creditor.' This strongly suggests that Congress intended that a tax claim could be held by a third party.").
In re Halabu, No. 11-59449, 2013 WL 780757 (Bankr. E.D. Mich. Mar. 1, 2013) (Tucker) (Unpaid real estate taxes incurred during Chapter 13 case before dismissal are administrative expenses to be paid pro rata with other administrative expenses from money on hand before returning balance to the debtor; real estate taxes paid by mortgagee after dismissal are not allowable administrative expenses either to the mortgagee or to the taxing authority. In a Chapter 13 case dismissed on February 24, 2012, there were real estate taxes incurred on December 31, 2011, that were unpaid and owing to the City of Orchard Lake. There were also real estate taxes paid by a mortgagee after dismissal of the case. Mortgagee sought unsuccessfully to collect the post-dismissal taxes from funds on hand at dismissal. Bankruptcy court concluded that real estate taxes paid by the mortgagee after dismissal are not allowable administrative expenses either to the mortgagee or to the taxing authority.), supplementing No. 11-59449, 2012 WL 5306128, at *5-*14, *13 n.13 (Bankr. E.D. Mich. Oct. 26, 2012) (Tucker) (Distinguishing Hall v. United States, __ U.S. __, 132 S. Ct. 1882, 182 L. Ed. 2d 840 (May 14, 2012), property tax is incurred by Chapter 13 estate between the petition and dismissal before confirmation and is likely to be an administrative expense after BAPCPA amendments notwithstanding that it is secured by a lien; taxing authority need not file a request for payment of postpetition tax incurred by Chapter 13 estate. "Under current law, . . . a governmental unit is not required to file any request for payment of an administrative expense—'timely,' 'tardily,' or at all—in order to be allowed an administrative expense for a tax incurred by the estate under § 503(b)(1)(B)(i). . . . This creates procedural questions for the Chapter 13 Trustee, and for the Court. . . . [H]ow is the Chapter 13 Trustee to know whether such taxing authority actually has such an administrative claim, and if so, what is the amount of such claim, when the Trustee has heard nothing from the taxing authority? . . . [I]n this situation, . . . the Trustee must investigate, and the Court must determine, whether the taxing authority has an allowed administrative claim for unpaid real estate taxes incurred by the bankruptcy estate. . . . The type of administrative claim at issue in this case—unpaid real estate taxes incurred by the estate—is special, in that it need not be filed at all in order to be allowed, under 11 U.S.C. § 503(b)(1)(D). . . . [T]he Court must allow an administrative expense for any unpaid real estate tax incurred by the Chapter 13 bankruptcy estate, whether or not the governmental unit has filed a request for payment or allowance of such an administrative expense. . . . [A] property tax on the debtor's home is 'incurred by the estate,' within the meaning of § 503(b)(1)[B](i), if the tax was incurred while the home is property of the bankruptcy estate. . . . That may change, . . . when and if a plan is confirmed. . . . [T]he 2005 BAPCPA amendment to § 503(b)(1)(B)(i) . . . clearly establishes an exception to the general rule . . . . Section 503(b)(1)(B)(i) now says that the taxing authority has an allowed administrative claim, whether the tax is 'secured or unsecured.'" In a footnote: "The rule is different with respect to income taxes. In a Chapter 13 case, as in a Chapter 12 case, the bankruptcy estate is not a separate taxable entity for purposes of federal, state, and local income taxes, and the estate does not incur such income taxes. Rather, only the bankruptcy debtor incurs income taxes. . . . But that rule does not extend to state or local property taxes.").
In re Fowler, 493 B.R. 148 (Bankr. E.D. Cal. Sept. 28, 2012) (Holman) (Rejecting In re Collier, 416 B.R. 713 (Bankr. N.D. Cal. Dec. 15, 2008) (Tchaikovsky), rev'd, No. 08-43740 TG, 2009 WL 5449150 (Bankr. N.D. Cal. Jan. 5, 2009) (unpublished) (Tchaikovsky), California Revenue and Taxation Code § 4103(b) is not a bankruptcy-specific provision that would be trumped by Supremacy Clause; instead, under § 511(a) of the Bankruptcy Code, 1% per month is required interest rate for California property tax claim.).
In re Paradis, 477 B.R. 295 (Bankr. D. Me. Sept. 10, 2012) (Haines) (Taxes assessed more than 240 days before petition were not priority; offer in compromise which was rejected by IRS did not toll three-year lookback period.).
In re Kopec, 473 B.R. 597, 600 (Bankr. D.N.J. June 20, 2012) (Ferguson) (Rejecting In re Princeton Office Park, L.P., 423 B.R. 795 (Bankr. D.N.J. Feb. 17, 2010) (Kaplan), and citing with approval Tax Ease Funding, L.P. v. Thompson (In re Kizzee-Jordan), 626 F.3d 239 (5th Cir. Nov. 11, 2010) (Jones, Reavley, Haynes), holder of tax sale certificate under New Jersey law has a "tax claim" for § 511 purposes and is entitled to interest at state statutory rate. "[I]n enacting § 511, Congress chose to use the broad term 'creditor', rather than the narrower term 'governmental units' . . . . That choice of language lends textual support to the conclusion that the term 'tax claim' in § 511 was intended to be broader than a debt owed to a taxing authority for unpaid taxes, and thus can encompass a third-party holder of a tax sale certificate.").
In re Clark, No. 11-07943-8-JRL, 2012 WL 1835181 (Bankr. E.D.N.C. May 18, 2012) (Leonard) (Under § 1305(a)(1), taxing authority may file claim for taxes that became payable while prior case was pending.).
In re Tarby, No. 11-32886/JHW, 2012 WL 1390201, at *4 (Bankr. D.N.J. Apr. 20, 2012) (unpublished) (Wizmur) (Hanging paragraph in § 507(a)(8) extended three-year look-back period for priority status because, in prior case, State Division of Taxation was prevented from collecting income taxes by automatic stay. Confirmation of plan in first case did not completely remove all property from bankruptcy estate, despite re-vesting. "[P]roperty of the estate retains its status as such, even through confirmation of the debtor's Chapter 13 plan, until dismissal, closure or conversion of the case, as § 1306(a) provides. At confirmation, the 'vesting' of property of the estate in the debtor, as provided in § 1327(b), means that the debtor's rights and interest in the property become fixed as of the confirmation of the plan, and are effected when the provisions of the debtor's Chapter 13 plan are satisfied. This interpretive approach recognizes that the debtor retains possession of all property of the estate, except as otherwise provided for in the debtor's confirmed plan or the order confirming the plan, see 11 U.S.C. § 1306(b), and that upon confirmation, the debtor is obligated to make such payments from property of the estate as are provided for in the plan, see 11 U.S.C. § 1325. The act of confirmation 'vests' all of the property of the estate in the debtor to allow the debtor to take the necessary steps to comply with the confirmed plan. 11 U.S.C. § 1327(b). The statute does not state that the event of confirmation changes the characterization of the property from property of the estate into property of the debtor. Instead, it merely confirms the debtor's ability to utilize property of the estate, notwithstanding that designation, in satisfaction of the debtor's obligations under the confirmed plan. As property of the estate, the debtor's resources necessary to consummate the plan remain protected by the automatic stay. 11 U.S.C. § 362(c). The property that vests in the debtor pursuant to section 1327 is free and clear upon the debtor's completion of the confirmed plan and upon the debtor's receipt of a Chapter 13 discharge.").
In re Gift, 469 B.R. 800 (Bankr. M.D. Tenn. Mar. 22, 2012) (Mashburn) (Government's oversecured claim for delinquent property taxes included interest, reasonable costs, fees and charges, but did not include penalty; statutory interest rate of 12% must be paid, pursuant to § 511 and Tennessee Code, but penalty was unsecured claim.).
In re Meyhoefer, 459 B.R. 167 (Bankr. N.D.N.Y. June 27, 2011) (Cangilos-Ruiz) ("Creditor" holding a tax claim for § 511 purposes need not be a governmental unit; applying New York and Syracuse law, purchaser of tax liens was entitled to 1% per month statutory rate of interest rather than Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (May 17, 2004), rate.).
In re Duffy, 452 B.R. 13, 20 (Bankr. N.D.N.Y. May 24, 2011) (Davis) (Holders of tax sale certificates are not entitled to special interest rate on tax claims in § 511(a); consideration of special "session law" might change that outcome, but tax claim purchasers failed to introduce session law when they should have. "Had it been submitted and considered in the first instance, the Court likely would have rendered a different decision after a complete analysis similar to that undertaken by the handful of courts that have addressed the rights of purchasers of tax sale certificates after BAPCPA's enactment of § 511.").
In re Crigler, No. 10-22769, 2011 WL 1344497 (Bankr. E.D. Ky. Apr. 8, 2011) (Wise) (Under Kentucky law, purchaser of ad valorem tax claim held fully secured tax claim and was entitled to postpetition interest at rate prescribed under Kentucky law, plus reasonable attorney fees.).
In re Stokes, No. 06-11296, 2010 WL 3980232, at *2-*3 (Bankr. E.D. Tenn. Oct. 8, 2010) (Cook) (Property taxes for postpetition tax years are administrative expenses under § 503(b)(1)(B)(i) and not postpetition claims under § 1305(a)(1) when confirmation order overcame vesting effect in § 1327(b) and state law made property taxes both a lien and a personal liability of the owner. Chapter 13 case was filed on May 3, 2006. Debtor failed to pay real property taxes for tax years 2006, 2007, 2008 and 2009. City filed request for payment of administrative expense s on July 16, 2010. Tennessee law provides that real property taxes become a lien and a personal debt of the property owner on January 1 of the tax year. The confirmation order provided that property of the estate did not vest in the debtor until completion of the plan. "Because the owner of the property on January 1, 2006, was the prepetition debtor and not the chapter 13 estate, the 2006 taxes were not 'incurred by the estate' and cannot, therefore, constitute an administrative expense. However, because the property belonged to the debtor's chapter 13 estate on January 1 of each of the three succeeding years, the 2007, 2008, and 2009 taxes were 'incurred by the estate.' . . . [For § 507(a)(8) purposes] it is clear that the 2007, 2008, and 2009 real property taxes were 'assessed' postpetition. . . . [T]he trustee believes that § 1305(a)(1) conflicts with § 503(b)(1)(B)(i) and that § 1305(a)(1), being the more specific statute, should control over the more general administrative expense statute. The two statutes, however, are not in conflict. They simply apply in different circumstances: § 503(b)(1)(B)(i) applies when the tax is 'incurred by the estate' and § 1305(a)(1) applies when the governmental entity 'holds a claim against the debtor.' . . . [A] Tennessee real property tax that becomes a personal liability of the owner of the property is 'incurred by the estate' if the property belongs to the estate on January 1 of the tax year. Hence, so long as the property remains property of the estate, § 503(b)(1)(B)(i) applies and § 1305 does not. The reverse is true with respect to income taxes . . . . Section 1305 would also apply, and § 503(b)(1)(B)(i) would not, with respect to real property taxes when the plan or confirmation order does not provide that property of the estate remains property of the estate after confirmation; in that event, any tax becoming a personal liability of the owner of the property after confirmation would be a 'claim against the debtor' because, after confirmation, it would be the debtor, not the bankruptcy estate, that owns the property. . . . [T]he trustee asserts that the City's request for payment of the administrative expenses was untimely. . . . [T]he trustee has failed to cite any authority that would support denying the request as untimely.").
In re Burch, No. 10-11360-JHW, 2010 WL 2889520 (Bankr. D.N.J. July 15, 2010) (unpublished) (Wizmur) (Distinguishing cases from Ohio and Texas, purchaser of tax sale certificate is not the holder of a "tax claim" for purposes of § 511; debtor can confirm plan that pays interest to purchaser at lower rate than rate to which municipalities are entitled under state law.).
In re McLemore, 426 B.R. 728, 744 (Bankr. S.D. Ohio Mar. 30, 2010) (Humphrey) (Purchaser of property tax claim is bound by confirmation of unambiguous plan providing interest at prime plus 1.5% risk factor notwithstanding § 511 and timely proof of claim seeking higher statutory rate. Confirmation trumped claims allowance process. Section 511 does not require court to disregard binding effect of confirmation. Debtor did not propose plan intentionally inconsistent with Code or attempt to trap creditor. Creditor's proof of claim was not "constructive objection to a plan[, which]. . . would constitute an end-run around the Code provisions and the Rules applicable to the plan confirmation process and would create confusion. The Code and the [R]ules provide two different, albeit related, processes to address plan confirmation issues and claim allowance issues by which creditors, debtors, and trustees must abide. A creditor or other party in interest who chooses to sleep on its rights by not objecting to a plan does so at its own peril and as long as due process requirements are met, will be bound by it. See [United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 1380 (Mar. 23, 2010)].").
In re Vasquez, No. 09-20565, 2010 WL 934210 (Bankr. S.D. Tex. Mar. 10, 2010) (unpublished) (Schmidt) (Tax lien purchased by third party must be paid with interest at Texas statutory rate under § 511.).
In re Turner, 420 B.R. 711 (Bankr. E.D. Mich. Dec. 21, 2009) (McIvor) (Adopting United States v. Ripley (In re Ripley), 926 F.2d 440 (5th Cir. Mar. 5, 1991) (Brown, Smith, Wiener), and rejecting Joye v. California Franchise Tax Board (In re Joye), 578 F.3d 1070 (9th Cir. Aug. 21, 2009) (Wallace, Thomas, Graber), income taxes for 2008 are § 1305 postpetition claims in Chapter 13 case filed on January 13, 2009; debtor cannot file claim on behalf of taxing authority, and § 502(i) makes clear that if taxing authority files a claim, that claim will be entitled to priority rather than administrative expense status.).
In re Bernbaum, 404 B.R. 39 (Bankr. D. Mass. Apr. 21, 2009) (Hillman) (Applying § 511, oversecured tax creditor was entitled to postpetition interest pursuant to Massachusetts law rather than federal judgment rate.).
In re Cortner, 400 B.R. 608 (Bankr. S.D. Ohio Feb. 4, 2009) (Humphrey) (Applying Ohio law, purchaser of tax certificate holds tax claim that triggers special interest rate in § 511 rather than Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), rate. "Under the plain language of § 511, the Creditor is entitled to the interest rate as determined under 'applicable nonbankruptcy law' . . . . The Creditor holds a 'tax claim' within the meaning of § 511 and not merely a lien against the property. . . . [U]nder Ohio law, the holder of tax certificates does not pay a county treasurer for the taxes and in turn hold a completely new debt with a lien against the real estate. Rather, under Ohio law, . . . the delinquent taxes are transferred and, therefore, the Creditor's clam is a tax claim. . . . [Section] 511, unlike other sections of the Code, is not limited to government units[.]".).
In re Collier, No. 08-43740 TG, 2009 WL 5449150 (Bankr. N.D. Cal. Jan. 5, 2009) (Tchaikovsky) (Under § 506(b), postpetition California tax penalties are charges that accrue and must be paid to confirm Chapter 13 plan.).
In re Collier, Nos. 08-43740 TG, 08-44842 TG, 2008 WL 5759832, at *3 (Bankr. N.D. Cal. Dec. 15, 2008) (Tchaikovsky) (Oversecured county was entitled to interest and delinquency penalty at state statutory rate pursuant to § 511(a); however, portion of California Revenue and Tax Code that imposes higher redemption penalty for debtors in bankruptcy is unconstitutional under Supremacy Clause. "The question is whether Congress's intent in enacting § 511(a) was to permit states to enact a bankruptcy specific interest rate or merely to subject bankruptcy debtors to the same interest rate imposed on nonbankruptcy debtors under state law. The Court concludes that Congress intended the latter, not the former. As a result, it concludes that § 4103(b) [of the California Revenue and Tax Code] violates the Supremacy Clause of the United States Constitution and is a nullity as applied to bankruptcy debtors.").
In re Prevo, 393 B.R. 464 (Bankr. S.D. Tex. Aug. 6, 2008) (Bohm) (Siding with In re Sheffield, 390 B.R. 302 (Bankr. S.D. Tex. 2008), and rejecting In re Davis, 352 B.R. 651 (Bankr. N.D. Tex. 2006), third-party lender that paid debtor's real estate taxes and took note secured by a deed of trust is not entitled to protection from interest rate modification in § 511. "This Court concludes that Section 511 applies to tax claims, and not to tax liens. The Court further concludes that, according to [Texas law], a third-party lender who pays another's real property taxes does not own a tax claim, and therefore, Section 511 does not apply. Finally, the Court holds that the Debtor may properly modify the interest rate on the promissory note held by the third-party lender under Section 1322(b)(2).").
In re Sheffield, 390 B.R. 302 (Bankr. S.D. Tex. July 2, 2008) (Isgur) (Nongovernmental party that paid tax claim and received assignment of tax lien does not hold "tax claim" for § 511 purposes and is not entitled to state statutory interest rate. RETax advanced money to debtors to pay ad valorem taxes, penalties and interest. RETax received promissory note and tax lien deed of trust from debtors. In addition, taxing authority transferred tax liens to RETax. At confirmation, RETax claimed 15% interest rate allowed by Texas tax law rather than lower rate provided in plan. "[T]he Texas Property Tax Code mandates that the property taxes be paid in order for RETax to be assigned the tax lien. . . . RETax's payment of the tax claim extinguished the tax claim. RETax acquired a new, non-tax claim when the Sheffields executed a promissory note in RETax's favor. . . . RETax has extinguished the underlying debt. RETax did not purchase the taxing unit's claim. . . . RETax's claim arises from the promissory note executed by the Sheffields. RETax's claim does not arise from the rights of a third-party that RETax purchased." Accord In re Soto, No. 08-36366, 2009 WL 260957 (Bankr. S.D. Tex. Feb. 2, 2009) (Isgur) (In re Sheffield, 390 B.R. 302 (Bankr. S.D. Tex. 2008), is not inconsistent with Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991), or Glance v. Carroll, 487 F.3d 317 (6th Cir. 2007); purchaser of real estate tax claim is allowed interest under Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), not under § 511.).
In re Jones, 368 B.R. 602 (Bankr. S.D. Tex. Apr. 18, 2007) (After enactment of § 511, oversecured tax claim is entitled to interest at state statutory rate, consistent with United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 109 S. Ct. 1026, 103 L. Ed. 2d 290 (1989); because Texas law has no provision for interest on any portion of a tax claim other than principal, oversecured taxing authority is not entitled to interest on interest, interest on penalties or interest on fees.).
In re Davis, 352 B.R. 651, 654 n.4 (Bankr. N.D. Tex. Aug. 30, 2006) (When private entity pays property taxes and takes a transfer of tax lien, interest is determined under nonbankruptcy law—here, contract rate because Texas law permits contract rate and attorney's fees. Genesis Tax Loan Services, Inc., paid ad valorem taxes on debtors' homestead and received transfer of tax lien. Contract with Genesis required debtors to repay taxes with 18% interest. Chapter 13 plan proposed 8.5% interest. Under Texas law, "[p]rivate entities that, like Genesis, hold transferred tax liens are treated differently than taxing authorities . . . . There is a separate statutory provision regulating the amount of interest that such third party tax lien holders may charge. . . . [I]f the court applies Texas law, Genesis is entitled to its contract rate of 18 percent. . . . [T]he debt underlying the claim is not owed to a governmental unit but rather to a private entity that, pursuant to a prepetition contractual agreement, paid off the taxes on behalf of the debtor . . . . The language of section 511 indicates Congressional intent to include claims held by private parties within its scope. . . . Congress' use of the broadly defined term 'creditor' rather than 'governmental unit' demonstrates Congressional recognition that tax claims may be held by private entities. . . . [I]f Genesis had not paid Debtors' property taxes and the taxing authority had filed a proof of claim for the delinquent taxes in Debtors' bankruptcy case, the rate of interest on its claim would be determined under applicable nonbankruptcy law under section 511. The claim should also be subject to section 511 in the hands of Genesis, the taxing authority's successor-in-interest. . . . The note executed by Debtors in favor of Genesis provides for the payment of attorney's fees, however, this was not the 'agreement . . . under which the claim arose.' Being a tax claim, Genesis' claim actually arose under the Texas Tax Code. Thus, Genesis is only entitled to reimbursement for reasonable attorney's fees to the extent that the Tax Code provides for their recovery. . . . [T]he Texas Tax Code allows a taxing unit to recover attorney's fees 'in the amount of 15 percent of the total amount of taxes, penalties, and interest due the unit.' . . . Texas courts have allowed third party tax lien holders such as Genesis to recover attorney's fees under this provision.").
Snyder v. Commissioner, Nos. 8740-13L, 7701-14L, 2015 WL 737972 (T.C. Feb. 18, 2015) (Goeke) (Tax court bound by res judicata to bankruptcy court's findings in adversary proceeding by debtors for determination of tax liabilities.).
Sawyer v. Commissioner of Internal Revenue, No. 1165-07S, 2014 WL 7330991 (T.C. Dec. 23, 2014) (Colvin) (Tax court lacks jurisdiction to determine whether a tax debt was discharged in a Chapter 13 case.).