Opinion
Case No. 03-30125-DK
January 22, 2004
Richard C. Willis, Esq. Counsel for Objecting Party
ORDER SUSTAINING OBJECTION TO CLAIM
The court has reviewed the objection filed by Debtor to the claim of the United States, Internal Revenue Service ("IRS"), and the IRS's response thereto, and the reply by Debtor. The court finds that the parties' arguments are sufficiently set forth in the pleadings and that a hearing would not aid the decisional process.
The IRS filed a proof of claim in Debtor's chapter 13 case, asserting an unsecured priority claim for income taxes due by debtor for tax period 1996 through 1999. Debtor has objected to the assertion by the IRS that the tax debts are entitled to priority treatment. Based on the pleadings, it appears that the parties are in agreement that the returns prepared for those tax years were filed after the chapter 13 bankruptcy case was initiated and the taxes were thereafter assessed.
Section 507(a)(8)(A)(iii) provides priority treatment for "allowed unsecured claims of governmental units, only to the extent that such claims are for a tax on or measured by income or gross receipts other than a tax of a kind specified in section 523(a)(1)(B) or 523(a)(1)(C) of this title, not assessed before, but assessable, under applicable law or by agreement, after, the commencement of the case." 11 U.S.C. § 507(a)(8)(A)(iii). The taxes at issue are asserted to have been due more than three years before the case was filed and not assessed within 240 days. Initially, the taxes meet the description of those subject to priority in Section 507(a)(8)(A)(iii), so the court turns next to the exceptions to such classification.
Section 523(a)(1)(B)(ii) describes: "a tax . . . (B) with respect to which a return, if required (ii) was filed after the date on which such return was last due, under applicable law, or under any extension, and after two years before the date of the filing of the petition." 11 U.S.C. § 523(a)(1)(B)(ii) (in relevant part). Based on the parties' allegations, the tax debts owed by Debtor do meet the description of Section 523(a)(1)(B)(ii) and are therefore, not entitled to priority treatment under Section 507a(8)(A)(iii).
Wherefore, it appearing that sufficient grounds for objection to the claim have been alleged, it is, by the United States Bankruptcy Court for the District of Maryland,
ORDERED, that the objection to the claim described above is hereby sustained, and said claim is entitled to non-priority treatment as a general unsecured claim.