II 

114TH CONGRESS 

1ST SESSION S. 194 

To amend title 11 of the United States Code to clarify the rule allowing 

discharge as a nonpriority claim of governmental claims arising from 

the disposition of farm assets under chapter 12 bankruptcies. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 20, 2015 

Mr. GRASSLEY (for himself and Mr. FRANKEN) introduced the following bill; 

which was read twice and referred to the Committee on the Judiciary 

A BILL 

To amend title 11 of the United States Code to clarify 

the rule allowing discharge as a nonpriority claim of 

governmental claims arising from the disposition of farm 

assets under chapter 12 bankruptcies. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Family Farmer Bank5 ruptcy Clarification Act of 2015’’. 


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1 SEC. 2. CLARIFICATION OF RULE ALLOWING DISCHARGE 

2 TO GOVERNMENTAL CLAIMS ARISING FROM 

3 THE DISPOSITION OF FARM ASSETS UNDER 

4 CHAPTER 12 BANKRUPTCIES. 

5 (a) IN GENERAL.—Subchapter II of chapter 12 of 

6 title 11, United States Code, is amended by adding at the 

7 end the following: 

8 ‘‘§ 1232. Claim by a governmental unit based on the 

9 disposition of property used in a farming 

10 operation 

11 ‘‘(a) Any unsecured claim of a governmental unit 

12 against the debtor or the estate that arises before the fil13 ing of the petition, or that arises after the filing of the 

14 petition and before the debtor’s discharge under section 

15 1228, as a result of the sale, transfer, exchange, or other 

16 disposition of any property used in the debtor’s farming 

17 operation— 

18 ‘‘(1) shall be treated as an unsecured claim 

19 arising before the date on which the petition is filed; 

20 ‘‘(2) shall not be entitled to priority under sec21 tion 507; 

22 ‘‘(3) shall be provided for under a plan; and 

23 ‘‘(4) shall be discharged in accordance with sec24 tion 1228. 

25 ‘‘(b) For purposes of applying sections 1225(a)(4), 

26 1228(b)(2), and 1229(b)(1) to a claim described in subVerDate Sep 11 2014 20:21 Jan 24, 2015 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S194.IS S194

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1 section (a) of this section, the amount that would be paid 

2 on such claim if the estate of the debtor were liquidated 

3 in a case under chapter 7 of this title shall be the amount 

4 that would be paid by the estate in a chapter 7 case if 

5 the claim were an unsecured claim arising before the date 

6 on which the petition was filed and were not entitled to 

7 priority under section 507. 

8 ‘‘(c) For purposes of applying sections 523(a), 

9 1228(a)(2), and 1228(c)(2) to a claim described in sub10 section (a) of this section, the claim shall not be treated 

11 as a claim of a kind specified in section 523(a)(1). 

12 ‘‘(d)(1) A governmental unit may file a proof of claim 

13 for a claim described in subsection (a) that arises after 

14 the date on which the petition is filed. 

15 ‘‘(2) If a debtor files a tax return after the filing of 

16 the petition for a period in which a claim described in sub17 section (a) arises, and the claim relates to the tax return, 

18 the debtor shall serve notice of the claim on the govern19 mental unit charged with the responsibility for the collec20 tion of the tax at the address and in the manner des21 ignated in section 505(b)(1). Notice under this paragraph 

22 shall state that the debtor has filed a petition under this 

23 chapter, state the name and location of the court in which 

24 the case under this chapter is pending, state the amount 

25 of the claim, and include a copy of the filed tax return 


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1 and documentation supporting the calculation of the 

2 claim. 

3 ‘‘(3) If notice of a claim has been served on the gov4 ernmental unit in accordance with paragraph (2), the gov5 ernmental unit may file a proof of claim not later than 

6 180 days after the date on which such notice was served. 

7 If the governmental unit has not filed a timely proof of 

8 the claim, the debtor or trustee may file proof of the claim 

9 that is consistent with the notice served under paragraph 

10 (2). If a proof of claim is filed by the debtor or trustee 

11 under this paragraph, the governmental unit may not 

12 amend the proof of claim. 

13 ‘‘(4) A claim filed under this subsection shall be de14 termined and shall be allowed under subsection (a), (b), 

15 or (c) of section 502, or disallowed under subsection (d) 

16 or (e) of section 502, in the same manner as if the claim 

17 had arisen immediately before the date of the filing of the 

18 petition.’’. 

19 (b) TECHNICAL AND CONFORMING AMENDMENTS.— 

20 (1) IN GENERAL.—Subchapter II of chapter 12 

21 of title 11, United States Code, is amended— 

22 (A) in section 1222(a)— 

23 (i) in paragraph (2), by striking ‘‘un24 less—’’ and all that follows through ‘‘the 

25 holder’’ and inserting ‘‘unless the holder’’; 


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1 (ii) in paragraph (3), by striking 

2 ‘‘and’’ at the end; 

3 (iii) in paragraph (4), by striking the 

4 period at the end and inserting ‘‘; and’’; 

5 and 

6 (iv) by adding at the end the fol7 lowing: 

8 ‘‘(5) subject to section 1232, provide for the 

9 treatment of any claim by a governmental unit of a 

10 kind described in section 1232(a).’’; 

11 (B) in section 1228— 

12 (i) in subsection (a)— 

13 (I) in the matter preceding para14 graph (1)— 

15 (aa) by inserting a comma 

16 after ‘‘all debts provided for by 

17 the plan’’; and 

18 (bb) by inserting a comma 

19 after ‘‘allowed under section 503 

20 of this title’’; and 

21 (II) in paragraph (2), by striking 

22 ‘‘the kind’’ and all that follows and in23 serting ‘‘a kind specified in section 

24 523(a) of this title, except as provided 

25 in section 1232(c).’’; and 


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1 (ii) in subsection (c)(2), by inserting 

2 ‘‘, except as provided in section 1232(c)’’ 

3 before the period at the end; and 

4 (C) in section 1229(a)— 

5 (i) in paragraph (2), by striking ‘‘or’’ 

6 at the end; 

7 (ii) in paragraph (3), by striking the 

8 period at the end and inserting ‘‘; or’’; and 

9 (iii) by adding at the end the fol10 lowing: 

11 ‘‘(4) provide for the payment of a claim de12 scribed in section 1232(a) that arose after the date 

13 on which the petition was filed.’’. 

14 (2) TABLE OF SECTIONS.—The table of sections 

15 for subchapter II of chapter 12 of title 11, United 

16 States Code, is amended by adding at the end the 

17 following: 

‘‘1232. Claim by a governmental unit based on the disposition of property used 

in a farming operation.’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to any bankruptcy case that— 

20 (1) is pending on the date of enactment of this 

21 Act and relating to which an order of discharge 

22 under section 1228 of title 11, United States Code, 

23 has not been entered; or 


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1 (2) commences on or after the date of enact2 ment of this Act. 

Æ 


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