Clarification of rule allowing discharge to governmental claims arising from the disposition of farm assets under chapter 12 bankruptcies

(a)

In general

Subchapter II of chapter 12 of title 11, United States Code, is amended by adding at the end the following:

1232.

Claim by a governmental unit based on the disposition of property used in a farming operation

(a)Any unsecured claim of a governmental unit against the debtor or the estate that arises before the filing of the petition, or that arises after the filing of the petition and before the debtor’s discharge under section 1228, as a result of the sale, transfer, exchange, or other disposition of any property used in the debtor’s farming operation—(1)shall be treated as an unsecured claim arising before the date on which the petition is filed;(2)shall not be entitled to priority under section 507;(3)shall be provided for under a plan; and(4)shall be discharged in accordance with section 1228.(b)For purposes of applying sections 1225(a)(4), 1228(b)(2), and 1229(b)(1) to a claim described in subsection (a) of this section, the amount that would be paid on such claim if the estate of the debtor were liquidated in a case under chapter 7 of this title shall be the amount that would be paid by the estate in a chapter 7 case if the claim were an unsecured claim arising before the date on which the petition was filed and were not entitled to priority under section 507.(c)For purposes of applying sections 523(a), 1228(a)(2), and 1228(c)(2) to a claim described in subsection (a) of this section, the claim shall not be treated as a claim of a kind specified in section 523(a)(1).(d)(1)A governmental unit may file a proof of claim for a claim described in subsection (a) that arises after the date on which the petition is filed.(2)If a debtor files a tax return after the filing of the petition for a period in which a claim described in subsection (a) arises, and the claim relates to the tax return, the debtor shall serve notice of the claim on the governmental unit charged with the responsibility for the collection of the tax at the address and in the manner designated in section 505(b)(1). Notice under this paragraph shall state that the debtor has filed a petition under this chapter, state the name and location of the court in which the case under this chapter is pending, state the amount of the claim, and include a copy of the filed tax return and documentation supporting the calculation of the claim.(3)If notice of a claim has been served on the governmental unit in accordance with paragraph (2), the governmental unit may file a proof of claim not later than 180 days after the date on which such notice was served. If the governmental unit has not filed a timely proof of the claim, the debtor or trustee may file proof of the claim that is consistent with the notice served under paragraph (2). If a proof of claim is filed by the debtor or trustee under this paragraph, the governmental unit may not amend the proof of claim.(4)A claim filed under this subsection shall be determined and shall be allowed under subsection (a), (b), or (c) of section 502, or disallowed under subsection (d) or (e) of section 502, in the same manner as if the claim had arisen immediately before the date of the filing of the petition.

(b)

Technical and conforming amendments

(1)

In general

Subchapter II of chapter 12 of title 11, United States Code, is amended—(A)in section 1222(a)—(i)in paragraph (2), by striking unless— and all that follows through the holder and inserting unless the holder;(ii)in paragraph (3), by striking and at the end;(iii)in paragraph (4), by striking the period at the end and inserting ; and; and(iv)by adding at the end the following:

(5)subject to section 1232, provide for the treatment of any claim by a governmental unit of a kind described in section 1232(a).

;

(B)in section 1228—(i)in subsection (a)—(I)in the matter preceding paragraph (1)—(aa)by inserting a comma after all debts provided for by the plan; and(bb)by inserting a comma after allowed under section 503 of this title; and(II)in paragraph (2), by striking the kind and all that follows and inserting a kind specified in section 523(a) of this title, except as provided in section 1232(c).; and(ii)in subsection (c)(2), by inserting , except as provided in section 1232(c) before the period at the end; and(C)in section 1229(a)—(i)in paragraph (2), by striking or at the end;(ii)in paragraph (3), by striking the period at the end and inserting ; or; and(iii)by adding at the end the following:

(4)provide for the payment of a claim described in section 1232(a) that arose after the date on which the petition was filed.

(2)

Table of sections

The table of sections for subchapter II of chapter 12 of title 11, United States Code, is amended by adding at the end the following:

1232. Claim by a governmental unit based on the disposition of property used in a farming operation.

(c)

Effective date

The amendments made by this section shall apply to any bankruptcy case that—(1)is pending on the date of enactment of this Act and relating to which an order of discharge under section 1228 of title 11, United States Code, has not been entered; or(2)commences on or after the date of enactment of this Act.