242
‘‘(11) if, at the time of the commencement of
the case, the debtor (or any entity designated by the
debtor) served as the administrator (as defined in
section 3 of the Employee Retirement Income Secu-
rity Act of 1974) of an employee benefit plan, con-
tinue to perform the obligations required of the ad-
ministrator; and’’.
(c) CONFORMING AMENDMENT.—Section 1106(a)(1)
of title 11, United States Code, is amended to read as
follows:
‘‘(1) perform the duties of the trustee, as speci-
fied in paragraphs (2), (5), (7), (8), (9), (10), and
(11) of section 704;’’.
SEC. 447. APPOINTMENT OF COMMITTEE OF RETIRED EM-
PLOYEES.
Section 1114(d) of title 11, United States Code, is
amended—
(1) by striking ‘‘appoint’’ and inserting ‘‘order
the appointment of’’, and
(2) by adding at the end the following: ‘‘The
United States trustee shall appoint any such com-
mittee.’’.
243
TITLE V—MUNICIPAL
BANKRUPTCY PROVISIONS
SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI-
TION.
(a) TECHNICAL AMENDMENT RELATING TO MUNICI-
PALITIES.—Section 921(d) of title 11, United States
Code, is amended by inserting ‘‘notwithstanding section
301(b)’’ before the period at the end.
(b) CONFORMING AMENDMENT.—Section 301 of title
11, United States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’;
and
(2) by striking the last sentence and inserting
the following:
‘‘(b) The commencement of a voluntary case under
a chapter of this title constitutes an order for relief under
such chapter.’’.
SEC. 
502. 
APPLICABILITY 
OF 
OTHER 
SECTIONS 
TO
CHAPTER 9.
Section 901(a) of title 11, United States Code, is
amended—
(1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and
(2) by inserting ‘‘559, 560, 561, 562,’’ after
‘‘557,’’.
244
TITLE VI—BANKRUPTCY DATA
SEC. 601. IMPROVED BANKRUPTCY STATISTICS.
(a) IN GENERAL.—Chapter 6 of title 28, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 159. Bankruptcy statistics
‘‘(a) The clerk of the district court, or the clerk of
the bankruptcy court if one is certified pursuant to section
156(b) of this title, shall collect statistics regarding debt-
ors who are individuals with primarily consumer debts
seeking relief under chapters 7, 11, and 13 of title 11.
Those statistics shall be in a standardized format pre-
scribed by the Director of the Administrative Office of the
United States Courts (referred to in this section as the
‘Director’).
‘‘(b) The Director shall—
‘‘(1) compile the statistics referred to in sub-
section (a);
‘‘(2) make the statistics available to the public;
and
‘‘(3) not later than July 1, 2006, and annually
thereafter, prepare, and submit to Congress a report
concerning the information collected under sub-
section (a) that contains an analysis of the informa-
tion.
245
‘‘(c) The compilation required under subsection (b)
shall—
‘‘(1) be itemized, by chapter, with respect to
title 11;
‘‘(2) be presented in the aggregate and for each
district; and
‘‘(3) include information concerning—
‘‘(A) the total assets and total liabilities of
the debtors described in subsection (a), and in
each category of assets and liabilities, as re-
ported in the schedules prescribed pursuant to
section 2075 of this title and filed by debtors;
‘‘(B) the current monthly income, average
income, and average expenses of debtors as re-
ported on the schedules and statements that
each such debtor files under sections 521 and
1322 of title 11;
‘‘(C) the aggregate amount of debt dis-
charged in cases filed during the reporting pe-
riod, determined as the difference between the
total amount of debt and obligations of a debtor
reported on the schedules and the amount of
such debt reported in categories which are pre-
dominantly nondischargeable;
246
‘‘(D) the average period of time between
the date of the filing of the petition and the
closing of the case for cases closed during the
reporting period;
‘‘(E) for cases closed during the reporting
period—
‘‘(i) the number of cases in which a
reaffirmation agreement was filed; and
‘‘(ii)(I) the total number of reaffirma-
tion agreements filed;
‘‘(II) of those cases in which a reaffir-
mation agreement was filed, the number of
cases in which the debtor was not rep-
resented by an attorney; and
‘‘(III) of those cases in which a reaf-
firmation agreement was filed, the number
of cases in which the reaffirmation agree-
ment was approved by the court;
‘‘(F) with respect to cases filed under
chapter 13 of title 11, for the reporting
period—
‘‘(i)(I) the number of cases in which a
final order was entered determining the
value of property securing a claim in an
247
amount less than the amount of the claim;
and
‘‘(II) the number of final orders en-
tered determining the value of property se-
curing a claim;
‘‘(ii) the number of cases dismissed,
the number of cases dismissed for failure
to make payments under the plan, the
number of cases refiled after dismissal,
and the number of cases in which the plan
was completed, separately itemized with re-
spect to the number of modifications made
before completion of the plan, if any; and
‘‘(iii) the number of cases in which
the debtor filed another case during the 6-
year period preceding the filing;
‘‘(G) the number of cases in which credi-
tors were fined for misconduct and any amount
of punitive damages awarded by the court for
creditor misconduct; and
‘‘(H) the number of cases in which sanc-
tions under rule 9011 of the Federal Rules of
Bankruptcy Procedure were imposed against
debtor’s attorney or damages awarded under
such Rule.’’.
248
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 6 of title 28, United States Code, is amended
by adding at the end the following:
‘‘159. Bankruptcy statistics.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect 18 months after the date of
enactment of this Act.
SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK-
RUPTCY DATA.
(a) AMENDMENT.—Chapter 39 of title 28, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 589b. Bankruptcy data
‘‘(a) RULES.—The Attorney General shall, within a
reasonable time after the effective date of this section,
issue rules requiring uniform forms for (and from time
to time thereafter to appropriately modify and approve)—
‘‘(1) final reports by trustees in cases under
chapters 7, 12, and 13 of title 11; and
‘‘(2) periodic reports by debtors in possession or
trustees in cases under chapter 11 of title 11.
‘‘(b) REPORTS.—Each report referred to in sub-
section (a) shall be designed (and the requirements as to
place and manner of filing shall be established) so as to
facilitate compilation of data and maximum possible ac-
cess of the public, both by physical inspection at one or
249
more central filing locations, and by electronic access
through the Internet or other appropriate media.
‘‘(c) REQUIRED INFORMATION.—The information re-
quired to be filed in the reports referred to in subsection
(b) shall be that which is in the best interests of debtors
and creditors, and in the public interest in reasonable and
adequate information to evaluate the efficiency and practi-
cality of the Federal bankruptcy system. In issuing rules
proposing the forms referred to in subsection (a), the At-
torney General shall strike the best achievable practical
balance between—
‘‘(1) the reasonable needs of the public for in-
formation about the operational results of the Fed-
eral bankruptcy system;
‘‘(2) economy, simplicity, and lack of undue
burden on persons with a duty to file reports; and
‘‘(3) appropriate privacy concerns and safe-
guards.
‘‘(d) FINAL REPORTS.—The uniform forms for final
reports required under subsection (a) for use by trustees
under chapters 7, 12, and 13 of title 11 shall, in addition
to such other matters as are required by law or as the
Attorney General in the discretion of the Attorney General
shall propose, include with respect to a case under such
title—
250
‘‘(1) information about the length of time the
case was pending;
‘‘(2) assets abandoned;
‘‘(3) assets exempted;
‘‘(4) receipts and disbursements of the estate;
‘‘(5) expenses of administration, including for
use under section 707(b), actual costs of admin-
istering cases under chapter 13 of title 11;
‘‘(6) claims asserted;
‘‘(7) claims allowed; and
‘‘(8) distributions to claimants and claims dis-
charged without payment,
in each case by appropriate category and, in cases under
chapters 12 and 13 of title 11, date of confirmation of
the plan, each modification thereto, and defaults by the
debtor in performance under the plan.
‘‘(e) PERIODIC REPORTS.—The uniform forms for
periodic reports required under subsection (a) for use by
trustees or debtors in possession under chapter 11 of title
11 shall, in addition to such other matters as are required
by law or as the Attorney General in the discretion of the
Attorney General shall propose, include—
‘‘(1) information about the industry classifica-
tion, published by the Department of Commerce, for
the businesses conducted by the debtor;
251
‘‘(2) length of time the case has been pending;
‘‘(3) number of full-time employees as of the
date of the order for relief and at the end of each
reporting period since the case was filed;
‘‘(4) cash receipts, cash disbursements and
profitability of the debtor for the most recent period
and cumulatively since the date of the order for re-
lief;
‘‘(5) compliance with title 11, whether or not
tax returns and tax payments since the date of the
order for relief have been timely filed and made;
‘‘(6) all professional fees approved by the court
in the case for the most recent period and cumula-
tively since the date of the order for relief (sepa-
rately reported, for the professional fees incurred by
or on behalf of the debtor, between those that would
have been incurred absent a bankruptcy case and
those not); and
‘‘(7) plans of reorganization filed and confirmed
and, with respect thereto, by class, the recoveries of
the holders, expressed in aggregate dollar values
and, in the case of claims, as a percentage of total
claims of the class allowed.’’.
252
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 39 of title 28, United States Code, is amended
by adding at the end the following:
‘‘589b. Bankruptcy data.’’.
SEC. 603. AUDIT PROCEDURES.
(a) IN GENERAL.—
(1) ESTABLISHMENT
OF
PROCEDURES.—The
Attorney General (in judicial districts served by
United States trustees) and the Judicial Conference
of the United States (in judicial districts served by
bankruptcy administrators) shall establish proce-
dures to determine the accuracy, veracity, and com-
pleteness of petitions, schedules, and other informa-
tion that the debtor is required to provide under sec-
tions 521 and 1322 of title 11, United States Code,
and, if applicable, section 111 of such title, in cases
filed under chapter 7 or 13 of such title in which the
debtor is an individual. Such audits shall be in ac-
cordance with generally accepted auditing standards
and performed by independent certified public ac-
countants or independent licensed public account-
ants, provided that the Attorney General and the
Judicial Conference, as appropriate, may develop al-
ternative auditing standards not later than 2 years
after the date of enactment of this Act.
253
(2) PROCEDURES.—Those procedures required
by paragraph (1) shall—
(A) establish a method of selecting appro-
priate qualified persons to contract to perform
those audits;
(B) establish a method of randomly select-
ing cases to be audited, except that not less
than 1 out of every 250 cases in each Federal
judicial district shall be selected for audit;
(C) require audits of schedules of income
and expenses that reflect greater than average
variances from the statistical norm of the dis-
trict in which the schedules were filed if those
variances occur by reason of higher income or
higher expenses than the statistical norm of the
district in which the schedules were filed; and
(D) establish procedures for providing, not
less frequently than annually, public informa-
tion concerning the aggregate results of such
audits including the percentage of cases, by dis-
trict, in which a material misstatement of in-
come or expenditures is reported.
(b) AMENDMENTS.—Section 586 of title 28, United
States Code, is amended—
254
(1) in subsection (a), by striking paragraph (6)
and inserting the following:
‘‘(6) make such reports as the Attorney General
directs, including the results of audits performed
under section 603(a) of the Bankruptcy Abuse Pre-
vention and Consumer Protection Act of 2003;’’; and
(2) by adding at the end the following:
‘‘(f)(1) The United States trustee for each district is
authorized to contract with auditors to perform audits in
cases designated by the United States trustee, in accord-
ance with the procedures established under section 603(a)
of the Bankruptcy Abuse Prevention and Consumer Pro-
tection Act of 2003.
‘‘(2)(A) The report of each audit referred to in para-
graph (1) shall be filed with the court and transmitted
to the United States trustee. Each report shall clearly and
conspicuously specify any material misstatement of income
or expenditures or of assets identified by the person per-
forming the audit. In any case in which a material
misstatement of income or expenditures or of assets has
been reported, the clerk of the district court (or the clerk
of the bankruptcy court if one is certified under section
156(b) of this title) shall give notice of the misstatement
to the creditors in the case.
255
‘‘(B) If a material misstatement of income or expend-
itures or of assets is reported, the United States trustee
shall—
‘‘(i) report the material misstatement, if appro-
priate, to the United States Attorney pursuant to
section 3057 of title 18; and
‘‘(ii) if advisable, take appropriate action, in-
cluding but not limited to commencing an adversary
proceeding to revoke the debtor’s discharge pursuant
to section 727(d) of title 11.’’.
(c) AMENDMENTS TO SECTION 521 OF TITLE 11,
U.S.C.—Section 521(a) of title 11, United States Code,
as so designated by section 106, is amended in each of
paragraphs (3) and (4) by inserting ‘‘or an auditor serving
under section 586(f) of title 28’’ after ‘‘serving in the
case’’.
(d) AMENDMENTS TO SECTION 727 OF TITLE 11,
U.S.C.—Section 727(d) of title 11, United States Code,
is amended—
(1) in paragraph (2), by striking ‘‘or’’ at the
end;
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
256
‘‘(4) 
the 
debtor 
has 
failed 
to 
explain
satisfactorily—
‘‘(A) a material misstatement in an audit
referred to in section 586(f) of title 28; or
‘‘(B) a failure to make available for inspec-
tion all necessary accounts, papers, documents,
financial records, files, and all other papers,
things, or property belonging to the debtor that
are requested for an audit referred to in section
586(f) of title 28.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect 18 months after the date of
enactment of this Act.
SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY
OF BANKRUPTCY DATA.
It is the sense of Congress that—
(1) the national policy of the United States
should be that all data held by bankruptcy clerks in
electronic form, to the extent such data reflects only
public records (as defined in section 107 of title 11,
United States Code), should be released in a usable
electronic form in bulk to the public, subject to such
appropriate privacy concerns and safeguards as Con-
gress and the Judicial Conference of the United
States may determine; and
257
(2) there should be established a bankruptcy
data system in which—
(A) a single set of data definitions and
forms are used to collect data nationwide; and
(B) data for any particular bankruptcy
case are aggregated in the same electronic
record.
TITLE VII—BANKRUPTCY TAX
PROVISIONS
SEC. 701. TREATMENT OF CERTAIN LIENS.
(a) TREATMENT OF CERTAIN LIENS.—Section 724
of title 11, United States Code, is amended—
(1) in subsection (b), in the matter preceding
paragraph (1), by inserting ‘‘(other than to the ex-
tent that there is a properly perfected unavoidable
tax lien arising in connection with an ad valorem tax
on real or personal property of the estate)’’ after
‘‘under this title’’;
(2) in subsection (b)(2), by inserting ‘‘(except
that such expenses, other than claims for wages, sal-
aries, or commissions that arise after the date of the
filing of the petition, shall be limited to expenses in-
curred under chapter 7 of this title and shall not in-
clude expenses incurred under chapter 11 of this
title)’’ after ‘‘507(a)(1)’’; and
258
(3) by adding at the end the following:
‘‘(e) Before subordinating a tax lien on real or per-
sonal property of the estate, the trustee shall—
‘‘(1) exhaust the unencumbered assets of the
estate; and
‘‘(2) in a manner consistent with section
506(c), recover from property securing an allowed
secured claim the reasonable, necessary costs and
expenses of preserving or disposing of such property.
‘‘(f) Notwithstanding the exclusion of ad valorem tax
liens under this section and subject to the requirements
of subsection (e), the following may be paid from property
of the estate which secures a tax lien, or the proceeds of
such property:
‘‘(1) Claims for wages, salaries, and commis-
sions that are entitled to priority under section
507(a)(4).
‘‘(2) Claims for contributions to an employee
benefit plan entitled to priority under section
507(a)(5).’’.
(b) DETERMINATION OF TAX LIABILITY.—Section
505(a)(2) of title 11, United States Code, is amended—
(1) in subparagraph (A), by striking ‘‘or’’ at
the end;
259
(2) in subparagraph (B), by striking the period
at the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(C) the amount or legality of any amount aris-
ing in connection with an ad valorem tax on real or
personal property of the estate, if the applicable pe-
riod for contesting or redetermining that amount
under any law (other than a bankruptcy law) has ex-
pired.’’.
SEC. 702. TREATMENT OF FUEL TAX CLAIMS.
Section 501 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(e) A claim arising from the liability of a debtor for
fuel use tax assessed consistent with the requirements of
section 31705 of title 49 may be filed by the base jurisdic-
tion designated pursuant to the International Fuel Tax
Agreement (as defined in section 31701 of title 49) and,
if so filed, shall be allowed as a single claim.’’.
SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF
TAXES.
Section 505(b) of title 11, United States Code, is
amended—
(1) in the first sentence, by inserting ‘‘at the
address and in the manner designated in paragraph
(1)’’ after ‘‘determination of such tax’’;
260
(2) by striking ‘‘(1) upon payment’’ and insert-
ing ‘‘(A) upon payment’’;
(3) by striking ‘‘(A) such governmental unit’’
and inserting ‘‘(i) such governmental unit’’;
(4) by striking ‘‘(B) such governmental unit’’
and inserting ‘‘(ii) such governmental unit’’;
(5) by striking ‘‘(2) upon payment’’ and insert-
ing ‘‘(B) upon payment’’;
(6) by striking ‘‘(3) upon payment’’ and insert-
ing ‘‘(C) upon payment’’;
(7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and
(8) by inserting before paragraph (2), as so
designated, the following:
‘‘(b)(1)(A) The clerk shall maintain a list under
which a Federal, State, or local governmental unit respon-
sible for the collection of taxes within the district may—
‘‘(i) designate an address for service of requests
under this subsection; and
‘‘(ii) describe where further information con-
cerning additional requirements for filing such re-
quests may be found.
‘‘(B) If such governmental unit does not designate
an address and provide such address to the clerk under
subparagraph (A), any request made under this subsection
may be served at the address for the filing of a tax return
261
or protest with the appropriate taxing authority of such
governmental unit.’’.
SEC. 704. RATE OF INTEREST ON TAX CLAIMS.
(a) IN GENERAL.—Subchapter I of chapter 5 of title
11, United States Code, is amended by adding at the end
the following:
‘‘§ 511. Rate of interest on tax claims
‘‘(a) If any provision of this title requires the pay-
ment 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.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter I of chapter 5 of title 11, United States
Code, is amended by adding at the end the following:
‘‘511. Rate of interest on tax claims.’’.
SEC. 705. PRIORITY OF TAX CLAIMS.
Section 507(a)(8) of title 11, United States Code, is
amended—
(1) in subparagraph (A)—
(A) in the matter preceding clause (i), by
inserting ‘‘for a taxable year ending on or be-
262
fore the date of the filing of the petition’’ after
‘‘gross receipts’’;
(B) in clause (i), by striking ‘‘for a taxable
year ending on or before the date of the filing
of the petition’’; and
(C) by striking clause (ii) and inserting the
following:
‘‘(ii) assessed within 240 days before
the date of the filing of the petition, exclu-
sive of—
‘‘(I) any time during which an
offer in compromise with respect to
that tax was pending or in effect dur-
ing that 240-day period, plus 30 days;
and
‘‘(II) 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.’’; and
(2) by adding at the end the following:
‘‘An otherwise applicable time period specified in
this paragraph shall be suspended for any period
during which a governmental unit is prohibited
under applicable nonbankruptcy law from collecting
263
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.’’.
SEC. 706. PRIORITY PROPERTY TAXES INCURRED.
Section 507(a)(8)(B) of title 11, United States Code,
is amended by striking ‘‘assessed’’ and inserting ‘‘in-
curred’’.
SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP-
TER 13.
Section 1328(a)(2) of title 11, United States Code,
as amended by section 314, is amended by striking ‘‘para-
graph’’ and inserting ‘‘section 507(a)(8)(C) or in para-
graph (1)(B), (1)(C),’’.
SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP-
TER 11.
Section 1141(d) of title 11, United States Code, as
amended by sections 321 and 330, is amended by adding
at the end the following:
264
‘‘(6) Notwithstanding paragraph (1), the confirma-
tion of a plan does not discharge a debtor that is a cor-
poration from any debt—
‘‘(A) of a kind specified in paragraph (2)(A) or
(2)(B) of section 523(a) that is owed to a domestic
governmental unit, or owed to a person as the result
of an action filed under subchapter III of chapter 37
of title 31 or any similar State statute; or
‘‘(B) for a tax or customs duty with respect to
which the debtor—
‘‘(i) made a fraudulent return; or
‘‘(ii) willfully attempted in any manner to
evade or to defeat such tax or such customs
duty.’’.
SEC. 
709. 
STAY 
OF 
TAX 
PROCEEDINGS 
LIMITED 
TO
PREPETITION TAXES.
Section 362(a)(8) of title 11, United States Code, is
amended by striking ‘‘the debtor’’ and inserting ‘‘a cor-
porate debtor’s tax liability for a taxable period the bank-
ruptcy court may determine or concerning the tax liability
of a debtor who is an individual for a taxable period end-
ing before the date of the order for relief under this title’’.
265
SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11
CASES.
Section 1129(a)(9) of title 11, United States Code,
is amended—
(1) in subparagraph (B), by striking ‘‘and’’ at
the end;
(2) in subparagraph (C), by striking ‘‘deferred
cash payments,’’ and all that follows through the
end of the subparagraph, and inserting ‘‘regular in-
stallment payments in cash—
‘‘(i) of a total value, as of the effective
date of the plan, equal to the allowed
amount of such claim;
‘‘(ii) over a period ending not later
than 5 years after the date of the order for
relief under section 301, 302, or 303; and
‘‘(iii) in a manner not less favorable
than the most favored nonpriority unse-
cured claim provided for by the plan (other
than cash payments made to a class of
creditors under section 1122(b)); and’’;
and
(3) by adding at the end the following:
‘‘(D) with respect to a secured claim which
would otherwise meet the description of an un-
secured claim of a governmental unit under sec-
266
tion 507(a)(8), but for the secured status of
that claim, the holder of that claim will receive
on account of that claim, cash payments, in the
same manner and over the same period, as pre-
scribed in subparagraph (C).’’.
SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB-
ITED.
Section 545(2) of title 11, United States Code, is
amended by inserting before the semicolon at the end the
following: ‘‘, except in any case in which a purchaser is
a purchaser described in section 6323 of the Internal Rev-
enue Code of 1986, or in any other similar provision of
State or local law’’.
SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI-
NESS.
(a) PAYMENT OF TAXES REQUIRED.—Section 960 of
title 28, United States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘Any’’; and
(2) by adding at the end the following:
‘‘(b) A tax under subsection (a) shall be paid on or
before the due date of the tax under applicable nonbank-
ruptcy law, unless—
‘‘(1) the tax is a property tax secured by a lien
against property that is abandoned under section
554 of title 11, within a reasonable period of time
267
after the lien attaches, by the trustee in a case
under title 11; or
‘‘(2) payment of the tax is excused under a spe-
cific provision of title 11.
‘‘(c) In a case pending under chapter 7 of title 11,
payment of a tax may be deferred until final distribution
is made under section 726 of title 11, if—
‘‘(1) the tax was not incurred by a trustee duly
appointed under chapter 7 of title 11; or
‘‘(2) before the due date of the tax, an order of
the court makes a finding of probable insufficiency
of funds of the estate to pay in full the administra-
tive expenses allowed under section 503(b) of title
11 that have the same priority in distribution under
section 726(b) of title 11 as the priority of that
tax.’’.
(b) PAYMENT OF AD VALOREM TAXES REQUIRED.—
Section 503(b)(1)(B)(i) of title 11, United States Code,
is amended by inserting ‘‘whether secured or unsecured,
including property taxes for which liability is in rem, in
personam, or both,’’ before ‘‘except’’.
(c) REQUEST FOR PAYMENT OF ADMINISTRATIVE
EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of
title 11, United States Code, is amended—
268
(1) in subparagraph (B), by striking ‘‘and’’ at
the end;
(2) in subparagraph (C), by adding ‘‘and’’ at
the end; and
(3) by adding at the end the following:
‘‘(D) notwithstanding the requirements of sub-
section (a), a governmental unit shall not be re-
quired to file a request for the payment of an ex-
pense described in subparagraph (B) or (C), as a
condition of its being an allowed administrative ex-
pense;’’.
(d) PAYMENT OF TAXES AND FEES AS SECURED
CLAIMS.—Section 506 of title 11, United States Code, is
amended—
(1) in subsection (b), by inserting ‘‘or State
statute’’ after ‘‘agreement’’; and
(2) in subsection (c), by inserting ‘‘, including
the payment of all ad valorem property taxes with
respect to the property’’ before the period at the
end.
SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.
Section 726(a)(1) of title 11, United States Code, is
amended by striking ‘‘before the date on which the trustee
commences distribution under this section;’’ and inserting
the following: ‘‘on or before the earlier of—
269
‘‘(A) the date that is 10 days after the
mailing to creditors of the summary of the
trustee’s final report; or
‘‘(B) the date on which the trustee com-
mences final distribution under this section;’’.
SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU-
THORITIES.
Section 523(a) of title 11, United States Code, as
amended by sections 215 and 224, is amended—
(1) in paragraph (1)(B)—
(A) in the matter preceding clause (i), by
inserting ‘‘or equivalent report or notice,’’ after
‘‘a return,’’;
(B) in clause (i), by inserting ‘‘or given’’
after ‘‘filed’’; and
(C) in clause (ii)—
(i) by inserting ‘‘or given’’ after
‘‘filed’’; and
(ii) by inserting ‘‘, report, or notice’’
after ‘‘return’’; and
(2) by adding at the end the following:
‘‘For purposes of this subsection, the term ‘return’ means
a return that satisfies the requirements of applicable non-
bankruptcy law (including applicable filing requirements).
Such term includes a return prepared pursuant to section
270
6020(a) of the Internal Revenue Code of 1986, or similar
State or local law, or a written stipulation to a judgment
or a final order entered by a nonbankruptcy tribunal, but
does not include a return made pursuant to section
6020(b) of the Internal Revenue Code of 1986, or a simi-
lar State or local law.’’.
SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN-
PAID TAXES.
Section 505(b)(2) of title 11, United States Code, as
amended by section 703, is amended by inserting ‘‘the es-
tate,’’ after ‘‘misrepresentation,’’.
SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON-
FIRM CHAPTER 13 PLANS.
(a) FILING
OF PREPETITION TAX RETURNS RE-
QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of
title 11, United States Code, as amended by sections 102,
213, and 306, is amended by inserting after paragraph
(8) the following:
‘‘(9) the debtor has filed all applicable Federal,
State, and local tax returns as required by section
1308.’’.
(b) ADDITIONAL TIME PERMITTED FOR FILING TAX
RETURNS.—
272
‘‘(i) the date that is 120 days after the
date of that meeting; or
‘‘(ii) the date on which the return is due
under the last automatic extension of time for
filing that return to which the debtor is enti-
tled, and for which request is timely made, in
accordance with applicable nonbankruptcy law.
‘‘(2) After notice and a hearing, and order entered
before the tolling of any applicable filing period deter-
mined under this subsection, if the debtor demonstrates
by a preponderance of the evidence that the failure to file
a return as required under this subsection is attributable
to circumstances beyond the control of the debtor, the
court may extend the filing period established by the trust-
ee under this subsection for—
‘‘(A) a period of not more than 30 days for re-
turns described in paragraph (1); and
‘‘(B) a period not to extend after the applicable
extended due date for a return described in para-
graph (2).
‘‘(c) For purposes of this section, the term ‘return’
includes a return prepared pursuant to subsection (a) or
(b) of section 6020 of the Internal Revenue Code of 1986,
or a similar State or local law, or a written stipulation
273
to a judgment or a final order entered by a nonbankruptcy
tribunal.’’.
(2) CONFORMING AMENDMENT.—The table of
sections for subchapter I of chapter 13 of title 11,
United States Code, is amended by adding at the
end the following:
‘‘1308. Filing of prepetition tax returns.’’.
(c) DISMISSAL
OR CONVERSION
ON FAILURE TO
COMPLY.—Section 1307 of title 11, United States Code,
is amended—
(1) by redesignating subsections (e) and (f) as
subsections (f) and (g), respectively; and
(2) by inserting after subsection (d) the fol-
lowing:
‘‘(e) Upon the failure of the debtor to file a tax return
under section 1308, on request of a party in interest or
the United States trustee and after notice and a hearing,
the court shall dismiss a case or convert a case under this
chapter to a case under chapter 7 of this title, whichever
is in the best interest of the creditors and the estate.’’.
(d) TIMELY FILED CLAIMS.—Section 502(b)(9) of
title 11, United States Code, is amended by inserting be-
fore the period at the end the following: ‘‘, and except that
in a case under chapter 13, a claim of a governmental
unit for a tax with respect to a return filed under section
1308 shall be timely if the claim is filed on or before the
274
date that is 60 days after the date on which such return
was filed as required’’.
(e) RULES FOR OBJECTIONS TO CLAIMS AND TO
CONFIRMATION.—It is the sense of Congress that the Ju-
dicial Conference of the United States should, as soon as
practicable after the date of enactment of this Act, pro-
pose amended Federal Rules of Bankruptcy Procedure
that provide—
(1) notwithstanding the provisions of Rule
3015(f), in cases under chapter 13 of title 11,
United States Code, that an objection to the con-
firmation of a plan filed by a governmental unit on
or before the date that is 60 days after the date on
which the debtor files all tax returns required under
sections 1308 and 1325(a)(7) of title 11, United
States Code, shall be treated for all purposes as if
such objection had been timely filed before such con-
firmation; and
(2) in addition to the provisions of Rule 3007,
in a case under chapter 13 of title 11, United States
Code, that no objection to a claim for a tax with re-
spect to which a return is required to be filed under
section 1308 of title 11, United States Code, shall
be filed until such return has been filed as required.
275
SEC. 717. STANDARDS FOR TAX DISCLOSURE.
Section 1125(a)(1) of title 11, United States Code,
is amended—
(1) by inserting ‘‘including a discussion of the
potential material Federal tax consequences of the
plan to the debtor, any successor to the debtor, and
a hypothetical investor typical of the holders of
claims or interests in the case,’’ after ‘‘records,’’;
and
(2) by striking ‘‘a hypothetical reasonable inves-
tor typical of holders of claims or interests’’ and in-
serting ‘‘such a hypothetical investor’’.
SEC. 718. SETOFF OF TAX REFUNDS.
Section 362(b) of title 11, United States Code, as
amended by sections 224, 303, 311, and 401, is amended
by inserting after paragraph (25) the following:
‘‘(26) under subsection (a), of the setoff under
applicable nonbankruptcy law of an income tax re-
fund, by a governmental unit, with respect to a tax-
able period that ended before the date of the order
for relief against an income tax liability for a taxable
period that also ended before the date of the order
for relief, except that in any case in which the setoff
of an income tax refund is not permitted under ap-
plicable nonbankruptcy law because of a pending ac-
tion to determine the amount or legality of a tax li-
276
ability, the governmental unit may hold the refund
pending the resolution of the action, unless the
court, on the motion of the trustee and after notice
and a hearing, grants the taxing authority adequate
protection (within the meaning of section 361) for
the secured claim of such authority in the setoff
under section 506(a);’’.
SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT-
MENT OF STATE AND LOCAL TAXES.
(a) IN GENERAL.—
(1) SPECIAL PROVISIONS.—Section 346 of title
11, United States Code, is amended to read as fol-
lows:
‘‘§ 346. Special provisions related to the treatment of
State and local taxes
‘‘(a) Whenever the Internal Revenue Code of 1986
provides that a separate taxable estate or entity is created
in a case concerning a debtor under this title, and the in-
come, gain, loss, deductions, and credits of such estate
shall be taxed to or claimed by the estate, a separate tax-
able estate is also created for purposes of any State and
local law imposing a tax on or measured by income and
such income, gain, loss, deductions, and credits shall be
taxed to or claimed by the estate and may not be taxed
to or claimed by the debtor. The preceding sentence shall
277
not apply if the case is dismissed. The trustee shall make
tax returns of income required under any such State or
local law.
‘‘(b) Whenever the Internal Revenue Code of 1986
provides that no separate taxable estate shall be created
in a case concerning a debtor under this title, and the in-
come, gain, loss, deductions, and credits of an estate shall
be taxed to or claimed by the debtor, such income, gain,
loss, deductions, and credits shall be taxed to or claimed
by the debtor under a State or local law imposing a tax
on or measured by income and may not be taxed to or
claimed by the estate. The trustee shall make such tax
returns of income of corporations and of partnerships as
are required under any State or local law, but with respect
to partnerships, shall make such returns only to the extent
such returns are also required to be made under such
Code. The estate shall be liable for any tax imposed on
such corporation or partnership, but not for any tax im-
posed on partners or members.
‘‘(c) With respect to a partnership or any entity treat-
ed as a partnership under a State or local law imposing
a tax on or measured by income that is a debtor in a case
under this title, any gain or loss resulting from a distribu-
tion of property from such partnership, or any distributive
share of any income, gain, loss, deduction, or credit of a
278
partner or member that is distributed, or considered dis-
tributed, from such partnership, after the commencement
of the case, is gain, loss, income, deduction, or credit, as
the case may be, of the partner or member, and if such
partner or member is a debtor in a case under this title,
shall be subject to tax in accordance with subsection (a)
or (b).
‘‘(d) For purposes of any State or local law imposing
a tax on or measured by income, the taxable period of
a debtor in a case under this title shall terminate only
if and to the extent that the taxable period of such debtor
terminates under the Internal Revenue Code of 1986.
‘‘(e) The estate in any case described in subsection
(a) shall use the same accounting method as the debtor
used immediately before the commencement of the case,
if such method of accounting complies with applicable non-
bankruptcy tax law.
‘‘(f) For purposes of any State or local law imposing
a tax on or measured by income, a transfer of property
from the debtor to the estate or from the estate to the
debtor shall not be treated as a disposition for purposes
of any provision assigning tax consequences to a disposi-
tion, except to the extent that such transfer is treated as
a disposition under the Internal Revenue Code of 1986.
279
‘‘(g) Whenever a tax is imposed pursuant to a State
or local law imposing a tax on or measured by income pur-
suant to subsection (a) or (b), such tax shall be imposed
at rates generally applicable to the same types of entities
under such State or local law.
‘‘(h) The trustee shall withhold from any payment of
claims for wages, salaries, commissions, dividends, inter-
est, or other payments, or collect, any amount required
to be withheld or collected under applicable State or local
tax law, and shall pay such withheld or collected amount
to the appropriate governmental unit at the time and in
the manner required by such tax law, and with the same
priority as the claim from which such amount was with-
held or collected was paid.
‘‘(i)(1) To the extent that any State or local law im-
posing a tax on or measured by income provides for the
carryover of any tax attribute from one taxable period to
a subsequent taxable period, the estate shall succeed to
such tax attribute in any case in which such estate is sub-
ject to tax under subsection (a).
‘‘(2) After such a case is closed or dismissed, the
debtor shall succeed to any tax attribute to which the es-
tate succeeded under paragraph (1) to the extent con-
sistent with the Internal Revenue Code of 1986.
280
‘‘(3) The estate may carry back any loss or tax at-
tribute to a taxable period of the debtor that ended before
the date of the order for relief under this title to the extent
that—
‘‘(A) applicable State or local tax law provides
for a carryback in the case of the debtor; and
‘‘(B) the same or a similar tax attribute may be
carried back by the estate to such a taxable period
of the debtor under the Internal Revenue Code of
1986.
‘‘(j)(1) For purposes of any State or local law impos-
ing a tax on or measured by income, income is not realized
by the estate, the debtor, or a successor to the debtor by
reason of discharge of indebtedness in a case under this
title, except to the extent, if any, that such income is sub-
ject to tax under the Internal Revenue Code of 1986.
‘‘(2) Whenever the Internal Revenue Code of 1986
provides that the amount excluded from gross income in
respect of the discharge of indebtedness in a case under
this title shall be applied to reduce the tax attributes of
the debtor or the estate, a similar reduction shall be made
under any State or local law imposing a tax on or meas-
ured by income to the extent such State or local law recog-
nizes such attributes. Such State or local law may also
provide for the reduction of other attributes to the extent
281
that the full amount of income from the discharge of in-
debtedness has not been applied.
‘‘(k)(1) Except as provided in this section and section
505, the time and manner of filing tax returns and the
items of income, gain, loss, deduction, and credit of any
taxpayer shall be determined under applicable nonbank-
ruptcy law.
‘‘(2) For Federal tax purposes, the provisions of this
section are subject to the Internal Revenue Code of 1986
and other applicable Federal nonbankruptcy law.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 3 of title 11, United States Code,
is amended by striking the item relating to section
346 and inserting the following:
‘‘346. Special provisions related to the treatment of State and local taxes.’’.
(b) CONFORMING AMENDMENTS.—Title 11 of the
United States Code is amended—
(1) by striking section 728;
(2) in the table of sections for chapter 7 by
striking the item relating to section 728;
(3) in section 1146—
(A) by striking subsections (a) and (b);
and
(B) by redesignating subsections (c) and
(d) as subsections (a) and (b), respectively; and
(4) in section 1231—
282
(A) by striking subsections (a) and (b);
and
(B) by redesignating subsections (c) and
(d) as subsections (a) and (b), respectively.
SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX
RETURNS.
Section 521 of title 11, United States Code, as
amended by sections 106, 225, 305, 315, and 316, is
amended by adding at the end the following:
‘‘(j)(1) Notwithstanding any other provision of this
title, if the debtor fails to file a tax return that becomes
due after the commencement of the case or to properly
obtain an extension of the due date for filing such return,
the taxing authority may request that the court enter an
order converting or dismissing the case.
‘‘(2) If the debtor does not file the required return
or obtain the extension referred to in paragraph (1) within
90 days after a request is filed by the taxing authority
under that paragraph, the court shall convert or dismiss
the case, whichever is in the best interests of creditors and
the estate.’’.
283
TITLE VIII—ANCILLARY AND
OTHER CROSS-BORDER CASES
SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11,
UNITED STATES CODE.
(a) IN GENERAL.—Title 11, United States Code, is
amended by inserting after chapter 13 the following:
‘‘CHAPTER 15—ANCILLARY AND OTHER
CROSS-BORDER CASES
‘‘Sec.
‘‘1501. Purpose and scope of application.
‘‘SUBCHAPTER I—GENERAL PROVISIONS
‘‘1502. Definitions.
‘‘1503. International obligations of the United States.
‘‘1504. Commencement of ancillary case.
‘‘1505. Authorization to act in a foreign country.
‘‘1506. Public policy exception.
‘‘1507. Additional assistance.
‘‘1508. Interpretation.
‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND
CREDITORS TO THE COURT
‘‘1509. Right of direct access.
‘‘1510. Limited jurisdiction.
‘‘1511. Commencement of case under section 301 or 303.
‘‘1512. Participation of a foreign representative in a case under this title.
‘‘1513. Access of foreign creditors to a case under this title.
‘‘1514. Notification to foreign creditors concerning a case under this title.
‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING
AND RELIEF
‘‘1515. Application for recognition.
‘‘1516. Presumptions concerning recognition.
‘‘1517. Order granting recognition.
‘‘1518. Subsequent information.
‘‘1519. Relief that may be granted upon filing petition for recognition.
‘‘1520. Effects of recognition of a foreign main proceeding.
‘‘1521. Relief that may be granted upon recognition.
‘‘1522. Protection of creditors and other interested persons.
‘‘1523. Actions to avoid acts detrimental to creditors.
‘‘1524. Intervention by a foreign representative.
‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND
FOREIGN REPRESENTATIVES
284
‘‘1525. Cooperation and direct communication between the court and foreign
courts or foreign representatives.
‘‘1526. Cooperation and direct communication between the trustee and foreign
courts or foreign representatives.
‘‘1527. Forms of cooperation.
‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS
‘‘1528. Commencement of a case under this title after recognition of a foreign
main proceeding.
‘‘1529. Coordination of a case under this title and a foreign proceeding.
‘‘1530. Coordination of more than 1 foreign proceeding.
‘‘1531. Presumption of insolvency based on recognition of a foreign main pro-
ceeding.
‘‘1532. Rule of payment in concurrent proceedings.
‘‘§ 1501. Purpose and scope of application
‘‘(a) The purpose of this chapter is to incorporate the
Model Law on Cross-Border Insolvency so as to provide
effective mechanisms for dealing with cases of cross-bor-
der insolvency with the objectives of—
‘‘(1) cooperation between—
‘‘(A) courts of the United States, United
States trustees, trustees, examiners, debtors,
and debtors in possession; and
‘‘(B) the courts and other competent au-
thorities of foreign countries involved in cross-
border insolvency cases;
‘‘(2) greater legal certainty for trade and in-
vestment;
‘‘(3) fair and efficient administration of cross-
border insolvencies that protects the interests of all
creditors, and other interested entities, including the
debtor;
285
‘‘(4) protection and maximization of the value
of the debtor’s assets; and
‘‘(5) facilitation of the rescue of financially
troubled businesses, thereby protecting investment
and preserving employment.
‘‘(b) This chapter applies where—
‘‘(1) assistance is sought in the United States
by a foreign court or a foreign representative in con-
nection with a foreign proceeding;
‘‘(2) assistance is sought in a foreign country in
connection with a case under this title;
‘‘(3) a foreign proceeding and a case under this
title with respect to the same debtor are pending
concurrently; or
‘‘(4) creditors or other interested persons in a
foreign country have an interest in requesting the
commencement of, or participating in, a case or pro-
ceeding under this title.
‘‘(c) This chapter does not apply to—
‘‘(1) a proceeding concerning an entity, other
than a foreign insurance company, identified by ex-
clusion in section 109(b);
‘‘(2) an individual, or to an individual and such
individual’s spouse, who have debts within the limits
specified in section 109(e) and who are citizens of