Kentucky’s Office of Unemployment Insurance’s claim for an overpayment of unemployment compensation benefits was not entitled to priority in the debtor’s chapter 13 case where the nature of the claim was better characterized as a “penalty” than a “tax.” In re Clardy, No. 22-30089 (Bankr. W.D. Ky. Dec. 1, 2022). Read More
Tag Archive: priority of claims
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Unemployment Overpayment Not a Priority Tax Debt
Posted by NCBRC - December 13th, 2022
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“Special Charges” Not Included in Priority Tax Debt
Posted by NCBRC - August 19th, 2022
The City of Milwaukee failed to present evidence that the “special charges” on the debtor’s delinquent property tax bill were in the nature of property taxes entitled to priority in the debtor’s chapter 13 plan. In re Peete, No. 21-23863 (Bankr. E.D. Wisc. June 30, 2022).
When the debtor filed for bankruptcy, the City of Milwaukee filed a claim for delinquent property taxes of which it claimed $26,754.99 as an unsecured priority debt. Ninety percent of the claim, however, represented special charges consisting of delinquent municipal services, delinquent storm water account, delinquent water account, and “total other special.” Only $903.36 of the claim represented “tax principal.” Additionally, $2,242.87 of the total amount represented interest and penalties.
The debtor objected to the claim’s priority status arguing that the special charges were not property tax debt entitled to priority under section 507(a)(8)(B). He filed a chapter 13 plan consistent with that view, and the City objected to confirmation. Read More
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Bankruptcy Court Takes 7th Circuit to Task
Posted by NCBRC - July 28th, 2022
The bankruptcy court gave the debtors guidance on how to challenge a decision issued by the Seventh Circuit earlier this month by pointing out, among other things, that the circuit court decision addressed an order not actually on appeal before it. In re Terrell, No. 18-28674 (Bankr. E.D. Wisc. July 19, 2022). Read More
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Employment Contract Is Domestic Support Obligation
Posted by NCBRC - April 13th, 2022
An employment contract between the debtor and his ex-spouse where the ex-spouse’s only responsibilities were to assist the debtor in family matters, was in the nature of domestic support and was entitled to priority treatment in the debtor’s chapter 7 bankruptcy. In re Wibracht, No. 21-50477 (Bankr. W.D. Tex. March 31, 2022). Read More
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The ACA’s Shared Responsibility Payment Is Not a Priority Claim
Posted by NCBRC - July 16th, 2021
“The shared responsibility payment is neither ‘a tax on or measured by income or gross Receipts’ nor ‘an excise tax on . . . a transaction’ within the meaning of § 507(a)(8)(A) or (E) of the Bankruptcy Code.” In re Juntoff, 2021 WL 1522206 (Bankr. N.D. Ohio April 15, 2021) (case nos. 1:19-bk-17032, 1:20-bk-13035) (unpublished). Read More
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ACA’s Shared Responsibility Payment Debt Not Entitled to Priority
Posted by NCBRC - November 20th, 2020
The shared responsibility payment under the Affordable Care Act is not an “excise tax,” within the meaning of section 507(a)(8) and, therefore, the IRS’s claim for unpaid SRP was not entitled to priority in bankruptcy. IRS v. Huenerberg, No. 18-1617 (E.D. Wisc. Oct. 22, 2020).
When the debtors filed for chapter 13 bankruptcy, the IRS submitted a claim for over $6,000 in unpaid taxes, a portion of which was attributable to the debtors’ failure to pay what they owed under the Affordable Care Act as their shared responsibility payment (SRP). The IRS sought to have the SRP treated as a priority tax debt under section 507(a). The bankruptcy court found that the SRP did not qualify as an “excise tax” under that section and denied the IRS’s motion. The IRS appealed to the district court. Read More
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Shared-Responsibility Payment Not an Excise Tax Entitled to Priority
Posted by NCBRC - March 3rd, 2020
The shared-responsibility payment required by the Affordable Care Act is not an “excise tax on a transaction” subject to priority treatment under section 507(a)(8)(E)(i). United States v. Chesteen, No. 19-30195 (5th Cir. Feb. 20, 2020) (unpublished).
In his chapter 13 bankruptcy schedules, Mr. Chesteen listed a $695.00 debt to the government based on his failure to make his 2016 shared-responsibility payment (SRP). His proposed plan did not provide for payment of the debt. The government amended its proof of claim to include the debt as “an excise tax on a transaction” entitled to priority under section 507(a)(8)(E)(i) and requiring repayment under section 1322(a)(2). Mr. Chesteen countered that the debt was not a tax but a penalty that did not enjoy priority under the Code. The bankruptcy court agreed with Mr. Chesteen. In re Chesteen, No. 17–11472, 2018 WL 878847, at *3 (Bankr. E.D. La. 9 Feb. 2018). On appeal, the district court reversed, finding the SRP had been enacted under Congress’s taxing powers. United States v. Chesteen, No. 18–2077, 2019 WL 1499532, at *2–3 (E.D. La. 25 Feb. 2019). Neither the bankruptcy court nor the district court addressed the issue of whether the SRP was an “excise tax on a transaction” under section 507(a)(8)(E)(i). Read More
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Traffic Fines Not Given Priority in Chapter 13
Posted by NCBRC - December 22nd, 2017
Claims based on post-petition traffic fines are not administrative expenses entitled to priority in chapter 13 bankruptcy. City of Chicago v. Marshall, No. 17-2308 (lead case) (N.D. Ill. Nov. 27, 2017).
Bankruptcy debtors in seven separate cases and two courts incurred post-petition traffic fines in the City of Chicago. The City moved the courts to prioritize its claims as “administrative expenses” under sections 503 and 507(a). The courts denied the City’s motions. Read More
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