139
and expenses of preserving or disposing of that prop-
erty.
‘‘(f) Notwithstanding the exclusion of ad valorem tax
liens set forth in this section and subject to the requirements
of subsection (e)—
‘‘(1) claims for wages, salaries, and commissions
that are entitled to priority under section 507(a)(3)
of this title; or
‘‘(2) claims for contributions to an employee ben-
efit plan entitled to priority under section 507(a)(4)
of this title,
may be paid from property of the estate which secures a
tax lien, or the proceeds of such property.’’.
(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;
(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
140
under any law (other than a bankruptcy law) has ex-
pired.’’.
SEC. 502. ENFORCEMENT OF CHILD AND SPOUSAL SUP-
PORT.
Section 522(c)(1) of title 11, United States Code, is
amended by inserting ‘‘, except that, notwithstanding any
other Federal law or State law relating to exempted prop-
erty, exempt property shall be liable for debts of a kind spec-
ified in paragraph (1) or (5) of section 523(a) of this title’’
before the semicolon at the end.
SEC. 503. EFFECTIVE NOTICE TO GOVERNMENT.
(a) EFFECTIVE NOTICE TO GOVERNMENTAL UNITS.—
Section 342 of title 11, United States Code, as amended
by section 405, is amended by adding at the end the follow-
ing:
‘‘(g) If a debtor lists a governmental unit as a creditor
in a list or schedule, any notice required to be given by
the debtor under this title, any rule, any applicable law,
or any order of the court, shall identify the department,
agency, or instrumentality through which the debtor is in-
debted. The debtor shall identify (with information such as
a taxpayer identification number, loan, account or contract
number, or real estate parcel number, where applicable),
and describe the underlying basis for the governmental
unit’s claim. If the debtor’s liability to a governmental unit
141
arises from a debt or obligation owed or incurred by another
individual, entity, or organization, or under a different
name, the debtor shall identify such individual, entity, or-
ganization, or name.
‘‘(h) The clerk shall keep and update quarterly, in the
form and manner as the Director of the Administrative Of-
fice of the United States Courts prescribes, and make avail-
able to debtors, a register in which a governmental unit
may designate a safe harbor mailing address for service of
notice in cases pending in the district. A governmental unit
may file a statement with the clerk designating a safe har-
bor address to which notices are to be sent, unless such gov-
ernmental unit files a notice of change of address.’’.
(b) ADOPTION OF RULES PROVIDING NOTICE.—The
Advisory Committee on Bankruptcy Rules of the Judicial
Conference shall, within a reasonable period of time after
the date of the enactment of this Act, propose for adoption
enhanced rules for providing notice to State, Federal, and
local government units that have regulatory authority over
the debtor or which may be creditors in the debtor’s case.
Such rules shall be reasonably calculated to ensure that no-
tice will reach the representatives of the governmental unit,
or subdivision thereof, who will be the proper persons au-
thorized to act upon the notice. At a minimum, the rules
should require that the debtor—
142
(1) identify in the schedules and the notice, the
subdivision, agency, or entity in respect of which such
notice should be received;
(2) provide sufficient information (such as case
captions, permit numbers, taxpayer identification
numbers, or similar identifying information) to per-
mit the governmental unit or subdivision thereof, en-
titled to receive such notice, to identify the debtor or
the person or entity on behalf of which the debtor is
providing notice where the debtor may be a successor
in interest or may not be the same as the person or
entity which incurred the debt or obligation; and
(3) identify, in appropriate schedules, served to-
gether with the notice, the property in respect of
which the claim or regulatory obligation may have
arisen, if any, the nature of such claim or regulatory
obligation and the purpose for which notice is being
given.
(c) EFFECT OF FAILURE OF NOTICE.—Section 342 of
title 11, United States Code, as amended by subsection (a)
and section 405, is amended by adding at the end the fol-
lowing:
‘‘(i)(1) A notice that does not comply with subsections
(d) and (e) shall have no effect unless the debtor dem-
onstrates, by clear and convincing evidence, that timely no-
143
tice was given in a manner reasonably calculated to satisfy
the requirements of this section was given, and that—
‘‘(A) either the notice was timely sent to the safe
harbor address provided in the register maintained by
the clerk of the district in which the case was pending
for such purposes; or
‘‘(B) no safe harbor address was provided in
such list for the governmental unit and that an officer
of the governmental unit who is responsible for the
matter or claim had actual knowledge of the case in
sufficient time to act.
‘‘(2) No sanction under section 362(h) of this title or
any other sanction which a court may impose on account
of violations of the stay under section 362(a) of this title
or failure to comply with section 542 or 543 of this title
may be imposed unless the action takes place after notice
of the commencement of the case as required by this section
has been received.’’.
SEC. 504. NOTICE OF REQUEST FOR A DETERMINATION OF
TAXES.
Section 505(b) of title 11, United States Code, is
amended by striking ‘‘Unless’’ at the beginning of the second
sentence thereof and inserting ‘‘If the request is made in
the manner designated by the governmental unit and un-
less’’.
144
SEC. 505. RATE OF INTEREST ON TAX CLAIMS.
Chapter 5 of title 11, United States Code, is amended
by adding at the end the following:
‘‘§ 511. Rate of interest on tax claims
‘‘Notwithstanding any provision of this title that re-
quires the payment of interest on a claim, if interest is re-
quired to be paid on a tax claim, the rate of interest shall
be as follows:
‘‘(1) In the case of ad valorem tax claims, wheth-
er secured or unsecured, other unsecured tax claims
where interest is required to be paid under section
726(a)(5) of this title and secured tax claims the rate
shall be determined under applicable nonbankruptcy
law.
‘‘(2) In the case of unsecured claims for taxes
arising before the date of the order for relief and paid
under a plan of reorganization, the minimum rate of
interest to be applied during the period after the fil-
ing of the petition shall be the Federal short-term rate
rounded to the nearest full percent, determined under
section 1274(d) of the Internal Revenue Code of 1986,
for the calendar month in which the plan is con-
firmed, plus 3 percentage points.’’.
145
SEC. 506. TOLLING OF PRIORITY OF TAX CLAIM TIME PERI-
ODS.
Section 507(a)(9)(A) of title 11, United States Code,
as so redesignated, is amended—
(1) in clause (i) by inserting after ‘‘petition’’
and before the semicolon ‘‘, plus any time, plus 6
months, during which the stay of proceedings was in
effect in a prior case under this title’’; and
(2) amend clause (ii) to read as follows:
‘‘(ii) assessed within 240 days before
the date of the filing of the petition, exclu-
sive of—
‘‘(I) any time plus 30 days dur-
ing which an offer in compromise with
respect of such tax, was pending or in
effect during such 240-day period;
‘‘(II) any time plus 30 days dur-
ing which an installment agreement
with respect of such tax was pending
or in effect during such 240-day pe-
riod, up to 1 year; and
‘‘(III) any time plus 6 months
during which a stay of proceedings
against collections was in effect in a
prior case under this title during such
240-day period.’’.
146
SEC. 507. ASSESSMENT DEFINED.
(a) ASSESSMENT
DEFINED
FOR
PRIORITY
PUR-
POSES.—Section 101 of title 11, United States Code, is
amended by inserting after paragraph (2) the following:
‘‘(3) ‘assessment’—
‘‘(A) for purposes of State and local taxes,
means that point in time when all actions re-
quired have been taken so that thereafter a tax-
ing authority may commence an action to collect
the tax, and
‘‘(B) for Federal tax purposes has the mean-
ing given such term in the Internal Revenue
Code of 1986;
and ‘assessed’ and ‘assessable’ shall be interpreted in
light of the definition of assessment in this para-
graph;’’.
(b) ASSESSMENT DEFINED FOR THE STAY OF PRO-
CEEDINGS.—Section 362(b)(9)(D) of title 11, United States
Code, is amended by inserting after ‘‘the making of an as-
sessment’’ the following: ‘‘as defined by applicable nonbank-
ruptcy law notwithstanding the definition of an ‘assess-
ment’ elsewhere in this title’’.
SEC. 508. CHAPTER 13 DISCHARGE OF FRAUDULENT AND
OTHER TAXES.
Section 1328(a)(2) of title 11, United States Code, is
amended by inserting ‘‘(1),’’ after ‘‘paragraph’’.
147
SEC. 509. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.
Section 1141(d) of title 11, United States Code, as
amended by section 119A, is amended by adding at the end
the following:
‘‘(6) Notwithstanding the provisions of paragraph (1),
the confirmation of a plan does not discharge a debtor
which is a corporation from any debt for a tax or customs
duty with respect to which the debtor made a fraudulent
return or willfully attempted in any manner to evade or
defeat such tax.’’.
SEC. 510. THE STAY OF TAX PROCEEDINGS.
(a) THE SECTION 362 STAY LIMITED TO PREPETITION
TAXES.—Section 362(a)(8) of title 11, United States Code,
is amended by striking the period at the end and inserting
‘‘, in respect of a tax liability for a taxable period ending
before the order for relief.’’.
(b) THE APPEAL OF TAX COURT DECISIONS PER-
MITTED.—Section 362(b)(9) of title 11, United States Code,
is amended—
(1) in subparagraph (C) by striking ‘‘or’’ at the
end,
(2) in subparagraph (D) by striking the period
at the end and inserting ‘‘; or’’, and
(3) by adding at the end the following:
‘‘(E) the appeal of a decision by a court or
administrative tribunal which determines a tax
148
liability of the debtor without regard to whether
such determination was made prepetition or
postpetition.’’.
SEC. 511. 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; and
(2) in subparagraph (C)—
(A) by striking ‘‘deferred cash payments,
over a period not exceeding six years after the
date of assessment of such claim,’’ and inserting
‘‘regular installment payments in cash, but in
no case with a balloon provision, and no more
than three months apart, beginning no later
than the effective date of the plan and ending on
the earlier of five years after the petition date or
the last date payments are to be made under the
plan to unsecured creditors,’’;
(B) by striking the period at the end and
inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(D) with respect to a secured claim which
would be described in section 507(a)(8) of this
149
title but for its secured status, the holder of such
claim will receive on account of such claim cash
payments of not less than is required in sub-
paragraph (C) and over a period no greater than
is required in such subparagraph.’’.
SEC. 512. THE AVOIDANCE OF STATUTORY TAX LIENS PRO-
HIBITED.
Section 545(2) of title 11, United States Code, is
amended by striking the semicolon at the end and inserting
‘‘, except where such purchaser is a purchaser described in
section 6323 of the Internal Revenue Code of 1986 or simi-
lar provision of State or local law;’’.
SEC. 513. 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) Such taxes shall be paid when due in the conduct
of such business unless—
‘‘(1) the tax is a property tax secured by a lien
against property that is abandoned within a reason-
able time after the lien attaches, by the trustee of a
bankruptcy estate, pursuant to section 554 of title 11;
or
150
‘‘(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, the court has
made a finding of probable insufficiency of funds of
the estate to pay in full the administrative expenses
allowed under section 503(b) of title 11 that have the
same priority in distribution under section 726(b) of
title 11 as such tax.’’.
(b) PAYMENT OF AD VALOREM TAXES REQUIRED.—
Section 503(b)(1)(B) of title 11, United States Code, is
amended in clause (i) by inserting after ‘‘estate,’’ and before
‘‘except’’ the following: ‘‘whether secured or unsecured, in-
cluding property taxes for which liability is in rem only,
in personam or both,’’.
(c) REQUEST FOR PAYMENT OF ADMINISTRATIVE EX-
PENSE TAXES ELIMINATED.—Section 503(b)(1) of title 11,
United States Code, is amended by adding at the end the
following:
‘‘(D) notwithstanding the requirements of sub-
section (a) of this section, a governmental unit shall
151
not be required to file a request for the payment of
a claim described in subparagraph (B) or (C);’’.
(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 stat-
ute’’ after ‘‘agreement’’; and
(2) in subsection (c) by inserting ‘‘, including
the payment of all ad valorem property taxes in re-
spect of the property’’ before the period at the end.
SEC. 514. 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
‘‘on or before the earlier of 10 days after the mailing to
creditors of the summary of the trustee’s final report or the
date on which the trustee commences final distribution
under this section’’.
SEC. 515. INCOME TAX RETURNS PREPARED BY TAX AU-
THORITIES.
Section 523(a)(1)(B) of title 11, United States Code,
is amended—
(1) by inserting ‘‘or equivalent report or notice,’’
after ‘‘a return,’’;
(2) in clause (i)—
152
(A) by inserting ‘‘or given’’ after ‘‘filed’’;
and
(B) by striking ‘‘or’’ at the end;
(3) in clause (ii)—
(A) by inserting ‘‘or given’’ after ‘‘filed’’;
(B) by inserting ‘‘, report, or notice’’ after
‘‘return’’; and
(4) by adding at the end the following:
‘‘(iii) for purposes of this subsection, a
return—
‘‘(I) must satisfy the requirements
of applicable nonbankruptcy law, and
includes a return prepared pursuant to
section 6020(a) of the Internal Revenue
Code of 1986, or similar State or local
law, or a written stipulation to a judg-
ment entered by a nonbankruptcy tri-
bunal, but does not include a return
made pursuant to section 6020(b) of
the Internal Revenue Code of 1986, or
similar State or local law, and
‘‘(II) must have been filed in a
manner permitted by applicable non-
bankruptcy law; or’’.
153
SEC. 516. THE DISCHARGE OF THE ESTATE’S LIABILITY FOR
UNPAID TAXES.
Section 505(b) of title 11, United States Code, is
amended in the second sentence by inserting ‘‘the estate,’’
after ‘‘misrepresentation,’’.
SEC. 517. REQUIREMENT TO FILE TAX RETURNS TO CON-
FIRM CHAPTER 13 PLANS.
(a) FILING OF PREPETITION TAX RETURNS REQUIRED
FOR PLAN CONFIRMATION.—Section 1325(a) of title 11,
United States Code, as amended by section 146, is amend-
ed—
(1) in paragraph (6) by striking ‘‘and’’ at the
end;
(2) in paragraph (7) by striking the period at
the end and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(8) if the debtor has filed all Federal, State,
and local tax returns as required by section 1308 of
this title.’’.
(b) ADDITIONAL TIME PERMITTED FOR FILING TAX
RETURNS.—(1) Chapter 13 of title 11, United States Code,
is amended by adding at the end the following:
‘‘§ 1308. Filing of prepetition tax returns
‘‘(a) On or before the day prior to the day on which
the first meeting of the creditors is convened under section
341(a) of this title, the debtor shall have filed with appro-
154
priate tax authorities all tax returns for all taxable periods
ending in the 6-year period ending on the date of filing
of the petition.
‘‘(b) If the tax returns required by subsection (a) have
not been filed by the date on which the first meeting of
creditors is convened under section 341(a) of this title, the
trustee may continue such meeting for a reasonable period
of time, to allow the debtor additional time to file any
unfiled returns, but such additional time shall be no more
than—
‘‘(1) for returns that are past due as of the date
of the filing of the petition, 120 days from such date,
‘‘(2) for returns which are not past due as of the
date of the filing of the petition, the later of 120 days
from such date or the due date for such returns under
the last automatic extension of time for filing such re-
turns to which the debtor is entitled, and for which
request has been timely made, according to applicable
nonbankruptcy law, and
‘‘(3) upon notice and hearing, and order entered
before the lapse of any deadline fixed according to
this subsection, where the debtor demonstrates, by
clear and convincing evidence, that the failure to file
the returns as required is because of circumstances be-
yond the control of the debtor, the court may extend
155
the deadlines set by the trustee as provided in this
subsection for—
‘‘(A) a period of no more than 30 days for
returns described in paragraph (1) of this sub-
section, and
‘‘(B) for no more than the period of time
ending on the applicable extended due date for
the returns described in paragraph (2).
‘‘(c) For purposes of this section only, a return in-
cludes a return prepared pursuant to section 6020 (a) or
(b) of the Internal Revenue Code of 1986 or similar State
or local law, or a written stipulation to a judgment entered
by a nonbankruptcy tribunal.’’.
(2) The table of sections of chapter 13 of title 11,
United States Code, is amended by inserting after the item
relating to section 1307 the following:
‘‘1308. Filing of prepetition tax returns.’’.
(c) DISMISSAL OR CONVERSION ON FAILURE TO COM-
PLY.—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 follow-
ing:
‘‘(e) Upon the failure of the debtor to file tax returns
under section 1308 of this title, on request of a party in
156
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 interests of creditors and the es-
tate.’’.
(d) TIMELY FILED CLAIMS.—Section 502(b)(9) of title
11, United States Code, is amended by striking the period
at the end and inserting ‘‘, and except that in a case under
chapter 13 of this title, a claim of a governmental unit for
a tax in respect of a return filed under section 1308 of this
title shall be timely if it is filed on or before 60 days after
such return or returns were filed as required.’’.
(e) RULES FOR OBJECTIONS TO CLAIMS AND TO CON-
FIRMATION.—It is the sense of Congress that the Advisory
Committee on Bankruptcy Rules of the Judicial Conference
should, within a reasonable period of time after the date
of the enactment of this Act, propose for adoption amended
Federal Rules of Bankruptcy Procedure which provide
that—
(1) notwithstanding the provisions of Rule
3015(f), in cases under chapter 13 of title 11, United
States Code, a governmental unit may object to the
confirmation of a plan on or before 60 days after the
debtor files all tax returns required under sections