Bankr. No.:
87-10230
Chapter:
12
Date of Decision:
June 7, 1988
Issue:
87-10230 - Krump- 87-10254 - Voeller - 87-10232 - Wendling. Section 507(a)(7). Plan treatment of tax claimants - debtors' plans propose to pay entire amount of pre-petition tax claims in deferred cash payments without interest.
Ruling:
: Real Estate Taxes: Section 507 (a)(7); Matter of Stanford, 826 F.2d 353 (5th Cir. 1987); United States v. Neal Pharmacal Co., 789 F.2d 1283 (8th Cir. 1986); 11 U.S.C. 101(33) and 101 (47). South Dakota real estate taxes are subject to statutory liens - In re Brandenburg, 71 B.R. 719 (Bkrtcy. D.S.D. 1987); SDCL 10-19-1 and 10-19-2; Salvation Army v. Barnett, 124 N.W.2d 365 (S.D. 1963). Classification of claims (partially secured, undersecured, unsecured priority claims) - Stanford; 3 Collier on Bankruptcy para. 506.04[1] (15th ed. 1988). Under South Dakota law real estate taxes are superior to other liens except as against the U.S. and South Dakota - Kruse v. State, 38 N.W.2d 925, 926 (S.D. l949) (quoting Hughes County v. Henry, 202 N.W. 286, 288 (S.D. 1925). Section 122(a)(2) - priority tax claimants; Section 507(a)(7)(B) - priority status for unsecured government claims ); Matter of Herr, 80 B.R. 135 (Bkrtcy. S.D. Iowa 1987); In re Citrowske, 72 B.R. 613, 617 (Bkrtcy. D. Minn. 1987); 5 Collier on Bankruptcy, para 122.02 (15th ed. 1988); Norton Bankruptcy Law and Practice, section 91.06 (1981). A creditor fully secured by virtue of a statutory lien, qualifies to receive interest at the state statutory rate under Section 506(b) - Brandenburg; 3 Collier on Bankruptcy para. 506.05 (15th ed. 1988). Post-petition interest accruing on the fully secured tax claims continues as long as there is sufficient collateral value to pay the interest, or until the effective date of the plan - In re Snyder Farms, Inc., 83 B.R. 977 (Bkrtcy. N.D. Ind. 1988); In re Lenz, 74 2 B.R. 413 (Bkrtcy. C.D. Ill. 1987). I.R.S. Income Taxes: As general propositions the Court would point out that delinquent I.R.S. taxes are subject to statutory liens - 26 U.S.C. 6321; 26 U.S.C. 6323; 11 U.S.C. 545.
Full Bankruptcy Court Decision:
