Much like other claims in bankruptcy, tax claims exist in three basic forms: unsecured, secured, and priority. The first class, unsecured, non-priority claims are treated much like a general unsecured claim would be treated, and is beyond the scope of this paper. Secured tax claims have received disparate treatment by the Code, sometimes resulting in a status that is less favorable than that of an unsecured but priority claim. At the prompting of the American Bankruptcy Institute, part of the 2005 revision to the Bankruptcy Code set out to address this disparity.[1] The question of if the introduced changes were enough to at least level the playing field between a secured tax claim and a priority tax claim remains, and if not, what else should be done.

In Part I of this paper will explore the evolution of tax claim treatment by first looking at the state of the Code before the 2005 revision, the proposal set forth by the American Bankruptcy Institute, and the resulting changes to the Code.[2]Part II will similarly look at the treatment of tax claims, but through the lens of the courts, and the decisions handed down before and after the 2005 revision.[3]Part III will take another look at the original question of if the changes have had the intend effect on the state of tax claims in bankruptcy, and then set forth two proposal to remedy the existing deficiency.[4]

[1]           Jack F. Williams, Tax Advisory Committee, Final Report of the Tax Advisory Committee to the National Bankruptcy Review Commission (1997) [hereinafter Committee Report].

[2]           See discussion infra Part I.

[3]           See discussion infra Part II.

[4]           See discussion infra Part III.