I.   History of Tax Claims in Bankruptcy

C.   Post-2005 Code

I.   1129

Much of section 1129 was left unchanged by 2005 act.[1]The most important change for the purposes of this paper were introduced in section 1129(a)(9)(D).[2]Subsection D introduced a new clause with main focus of requiring secured tax claims receive at least as favored treatment as a priority claim.[3]This only applies to secured claims, which if not for its secured status, would have been classified as a priority claim.[4]It grants such claims at least the same treatment as priority claims, including the same manner of payments, over the same period of time.[5]

II.   724

The revision introduced by the 2005 act left the majority of § 724 intact.[6]While additional language is sprinkled throughout the section,[7]most of it is explanatory,[8]and meant to clarify the intent instead of changing the direction.[9]Only after the main body, that keeps the same priority scheme as the pre-2005 code,[10]are the new changes introduced. The first change places limitations on when the trustee can subordinate a tax lien,[11]allowing it only after other options have been exhausted.[12]In addition, ad valorem tax liens may be used to pay certain claims if other options have been spent.[13]

III.   507

The revision adopted two of the three suggestions set forth by the tax advisory committee.[14]First, it adopted the proposal to stop the tolling of the 240-day window for offers in compromise.[15]Second, it suspended tolling of the 240-day window for any periods of time in which collections are stayed.[16]Only the third proposal, the clarification of the term assessment was not adopted.[17]

[1]           See generally 11 U.S.C. 1129 (2012).

[2]           § 1129(a)(9)(D).

[3]           *Id.*

[4]           *Id.*

[5]           *Id.*

[6]           See generally 11 U.S.C. 724 (2012).

[7]           See § 724(b) (adding a parenthetical clarifying which property is subject to this section by excluding “properly perfected unavoidable [liens] arising in connection with an ad valorem tax.”)

[8]           See § 724(b)(2) (excluding certain expenses).

[9]           *Id.*

[10]          § 724(b).

[11]          § 724(e).

[12]          § 724(e)(1).

[13]          § 724(f).

[14]          11 U.S.C. 507 (2012).

[15]          § 507(a)(8)(A)(ii)(I).

[16]          § 507(a)(8)(A)(ii)(II).

[17]          See generally § 507 (the term “assess” is not defined in the entirety of this section.)