TABLE 6

H.R. 3150 Section and Topic	Recommendations
Sec. 501(a)(1). Exempting ad valorem tax from subordination under section 724.	No change recommended.
Sec. 501(a)(2). Subordination of tax liens to chapter 7 expense only.	Delete this provision. It will limit the recovery of assets for unsecured creditors. A chapter 11 trustee is often better equipped to recover assets than taxing authorities.
Sec. 501(a)(3). Trustee exhaust unencumbered assets, recover from secured lender reasonable and necessary costs and expenses to preserve or dispose of the property, and subordinate tax lines to wages and employee benefit plans.	No change recommended.
Sec. 501(b). Precludes determination of taxes where applicable period under any law other than a bankruptcy law has expired.	Modify to provide that bankruptcy court can determine the tax. Often debtors in financial difficulty do not object to tax claims that are based on assets that have declined in value or for which no return was filed resulting in tax being based on unreasonably high values.
Sec. 502. Section 522(c)(1) is modified to provide that exempt property shall be liable for debts of a kind specified in section 523(a)(1) or (5) of this title.	The meaning of this section is not clear. Since the impact this change will have is not known, it is difficult to comment on the proposed change.
Sec. 503. Provides for effective notice to Governmental Units.	Modify to provide that Rules Committee issues notice requirements.
Sec. 504. Requires proper notice before taxes determined under section 505(b).	No change recommended.
Sec. 505. Provides for use of the interest rate in IRS section 6621(a)(2) for prepetition taxes.	Modify to provided that it is the rate without reference to section 6621(c) and that it is the rate in effect as of the confirmation date. In a chapter 11 case the rate should not be allowed to fluctuate from quarter to quarter.
Sec 506. (1) Provides for tolling of priority of tax claim time periods during prior bankruptcy.	Agree with general provision, but suggest that to be consistent with the provision that the additional time gives the taxing authority time to respond once the stay has been removed, the wording should be greater of time the stay (or offer in compromise) was in effect or six months (30 days for offer in compromise).
(2) Extends the tolling to installment agreements.	Delete this provision. During the time period prior to or at the time the IRS enters into an installment agreement, the IRS has the right to place liens on the debtor's property. This change penalizes those individuals that in good faith extend the time period for payment of their claims, and an unfortunate events force them to file a bankruptcy petition resulting in their taxes not being discharged, but would have been if they had not entered into the agreement.
Sec. 507. Assessment defined.	No change recommended.
Sec. 508. Section 1328 would be modified to make chapter 13 nondischarge provisions consistent with chapter 7 provisions.	Delete this Provision. Chapter 13 facilitates the workout of tax claims and is consistent with other provisions of H.R. 3150 that require taxpayers to pay some of their claims over the plan period.
Sec. 509. Section 1141(d) the confirmation of a plan does not discharge a corporation for a tax claim with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.	Delete his provision. Management of the company that was involved with the fraud is generally replaced and a provision that prohibits a nonpriority tax from being discharged limits the ability of the creditors to reorganize the debtor and punishes employees and other interested parties.
Sec. 510. (1) The stay under section 362(a)(8) would be revised to apply only to a tax liability for a taxable period ending before the order for relief.	Modify provision to apply to only prepetition taxes. Taxes incurred after year-end, but before filing of petition may still be prepetition taxes.
(2) Provides that the stay does not apply to the appeal of a previous court.	No change recommended.
Sec. 511. (1) Establishes required payments of at least 15 % first five years and no more than 20% in final year.	Modify to follow the recommendation of the NBRC and the Tax Advisory Committee suggested that the payments should be periodic, but did not define periodic other than to suggest that the payments should be monthly or quarterly and that balloon payments be prohibited.
(2) Require secured claims to follow requirements of section 1129(a)(9).	No change recommended provided above suggestion is followed.
Sec. 512. Overrule cases that penalize the government due to certain benefits for purchasers provided for in the lien provision of the IRC.	No comments on this proposed change.
Sec. 513. Payment of postpetition taxes is required when taxes are due in the course of such business.	No change recommended. However, the writer is concerned that this provision may on occasion place taxes above other administrative expenses.
Sec. 514 Provides that taxing authority must file a claim before the final order approving the trustee's report.	No change recommended.
Sec. 515. Modifies section 523(a)(1)(B) to include tax return prepared by taxing authorities.	Delete last section of proposed law and follow both NBRC and Tax Advisory Committee to include returns filed under section 6020(b).
Sec. 516. Includes the word “estate” for purposes of tax determination under section 505(b).	No change recommended. However, section 505(b) should provide that IRS must determine tax for partnerships and S corporations.
Sec. 517. Requires tax returns for six years in chapter 13 cases.	Modify to provide that a return filed under IRC section 6020(b) or similar federal, state, or local law provisions, constitute a filed return for Bankruptcy Code dischargeability purposes.
Sec. 518. Requires tax disclosure.	No change recommended.
Sec. 519. Setoff of tax liability against tax refund.	No comments on this proposal.