IN RE SAVARIA

BAP No. MT-04-1136-KSB. Bankruptcy No. 02-61313-13.

317 B.R. 395 (2004)

In re Michael J. SAVARIA; Kelli A. Boyer, Debtors. Michael J. Savaria; Kelli A. Boyer, Appellants, v. United States; Robert G. Drummond, Chapter 13 Trustee, Appellees.

United States Bankruptcy Appellate Panel of the Ninth Circuit.

Filed November 10, 2004.


Attorney(s) appearing for the Case

James A. Patten, Patten, Peterman, Bekkedahl & Green, P.L.L.C., Billings, MT, for Michael and Kelli Savaria.

Victoria L. Francis, Assistant U.S. Attorney, Billings, MT, for United States.

Before KLEIN, SMITH, and BRANDT, Bankruptcy Judges.


OPINION

KLEIN, Bankruptcy Judge.

This appeal involves what courts of appeal have described as the Bankruptcy Code's "delicate balance" between priority status for taxes and discharge of taxes and whether that balance shifts when delinquent tax returns are filed after bankruptcy is filed.

The Internal Revenue Service argues that tax debt that is nondischargeable and not entitled to priority as of the date of the filing of bankruptcy becomes...

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