Bankruptcy — Chapter 12 — taxes

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The federal income tax liability resulting from a bankrupt’s postpetition farm sale is not “incurred by the estate” under sec. 503(b) of the Bankruptcy Code and thus is neither collectible nor dischargeable in Chapter 12.

None of the contrary arguments by petitioners and the dissent overcomes the statute’s plain language, context, and structure. There is no textual basis for giving “incurred by the estate” a temporal meaning, such that it refers to all taxes “incurred postpetition.” Nor does the text support deeming a tax “incurred by the estate” whenever it is paid by the debtor out of property of the estate. Section 503’s legislative history is not inconsistent with this Court’s holding, and the Court has cautioned against allowing ambiguous legislative history to muddy clear statutory language. See Milner v. Department of Navy, 562 U. S. ___, ___. Meanwhile, any cases suggesting that postpetition taxes were treated as administrative expenses are inapposite because they involve corporate debtors, which Congress has singled out for responsibilities paralleling those borne by a separate taxable entity’s trustee. Finally, petitioners contend that the purpose of §1222(a)(2)(A) was to provide debtors with robust relief from tax debts. There may be compelling policy reasons for treating postpetition income tax liabilities as dischargeable. But if Congress intended petitioners’ result, it did not so provide in the statute.
617 F. 3d 1161, affirmed.

10-875 Hall v. U.S.

Sotomayor, J.; Breyer, J., dissenting.

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