ANDERSON, Circuit Judge:
The United States appeals the invalidation of its assessment of a tax liability against James White following confirmation of White's Chapter 11 bankruptcy plan. We reverse and direct entry of summary judgment for the Government.
White was president and sole shareholder of WCC, Inc. On May 3, 1993, White filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. The bankruptcy court confirmed his reorganization plan on May 18, 1994. The plan provided that the title and ownership of the estate's assets would revest in White as of the "Effective Date," defined as "the date sixty (60) days following the date after which the Order of Confirmation is no longer subject to appeal and on which date no such appeal is pending," or July 17, 1994. The final decree was entered in White's Chapter 11 proceeding on December 12, 1994.
On July 4, 1994, the IRS assessed a liability in the total amount of $109,724.30 pursuant to I.R.C. § 6672 against White for willfully failing to pay the IRS the income and social security taxes required to be withheld from his employees' paychecks. The IRS later sued White for collection in the Northern District of Georgia.
On May 3, 2005, the district court entered judgment for White and the Government timely filed this appeal.
Before discussing the merits of the parties' arguments, it will be useful to outline statutory provisions which were in effect and governed the 1994 events in this case.
This case involves the application of § 362(c)(2)(C) providing that the automatic stay is lifted at the time a discharge is granted.
We review a district court's grant of summary judgment
As noted above, the relevant statutory provisions provide that confirmation of the plan discharges the debtor,
In addition, the rule suggested by the district court contradicts a plain reading of the relevant statutes. Section 1441 of the Bankruptcy Code states that "the confirmation of a plan . . . discharges the debtor from any [dischargeable] debt" and it does not make the discharge contingent upon the types of debts the debtor owes. A debtor cannot receive different discharges for different types of debt but can be granted only a single discharge applicable to all debts.
The validity of the IRS' assessment depends upon whether a discharge was granted on the date of the plan's confirmation, May 18, 1994, which was prior to the date of assessment, July 4, 1994. The plan did not contain any provisions explicitly stating that the discharge would take place after confirmation, but the plan did say that it would take effect sixty days after the Order of Confirmation could no longer be appealed, i.e. July 17, 1994. Thus, we must determine whether a discharge was granted upon confirmation of the plan or upon the plan's effective date. We conclude that a plan's identification of a post-confirmation effective date is not sufficient to delay the grant of discharge.
We begin by noting that the statutory language does not explicitly refer to an effective date.
First, we note that while the Bankruptcy Code makes numerous references to the effective date of the reorganization plan, it does not in the instant provision. If the plan could delay the grant of discharge merely by having a post-confirmation effective date, then Congress' statement that "the confirmation of a plan . . . discharges the debtor from any debt . . ." would be in error. The reason is that, under this interpretation of § 1141(d)(1), confirmation of a plan would discharge debts only when the plan takes effect upon confirmation. That is to say, the triggering event for discharge would not actually be the plan's confirmation but the plan's taking effect. Because of the Bankruptcy Code's numerous references to the reorganization plan's effective date elsewhere, we should assume that had Congress intended to condition discharges on a plan's taking effect, it would have done so explicitly.
Second, our interpretation of §1141 is consistent with the policy aims behind the Bankruptcy Code's identification of taxes as nondischargeable debts. Nondischargeable debts are those types of debts, such as taxes or child support payments, that Congress thought important enough to be paid in full, even if doing so impeded the debtor's ability to make a fresh start. "It is apparent to us that Congress has made the choice between collection of revenue and rehabilitation of the debtor by making it extremely difficult for a debtor to avoid payment of taxes under the Bankruptcy Code."
It is true that a plan can delay the payment of nondischargeable debts, but such provisions require the approval of the bankruptcy judge who must consider the merits of such provisions in deciding whether to confirm the plan. But we cannot conclude that court approval of a post-confirmation effective date necessarily entails a further approval of delayed payments to holders of nondischargeable debts. The merits of allowing a debtor to delay payments to holders of debt pursuant to the bankruptcy plan, and the merits of allowing the same debtor to delay payments to holders of nondischargeable debt are quite different. As indicated above, payment of nondischargeable debts has priority.
Finally, holders of debts pursuant to the plan face formal constraints that holders of nondischargeable debts do not. Holders of debt pursuant to the plan cannot move for collection until the plan becomes effective because the plan defines their rights and the terms of repayment. But by definition, holders of nondischargeable debts need not rely on the terms of the plan to vindicate their rights to collection. In addition, if such creditors hold debts against the debtor, rather than the estate, they can rely on assets not in the estate for payment, such as the debtor's after-acquired income, and so need not wait until the effective date, when the bankruptcy estate will revest in the debtor. As discussed in the next section, the IRS assessment was an action against White's person, not the estate, and so the IRS' right of collection was not dependent upon the plan's having taken effect.
White argues, and the district court agreed in an alternative holding, that the IRS assessment is invalid because it was made before the plan revested the estate in him. This fact is not significant, however, because the tax assessment was made against White's person, not the estate.
An IRS tax assessment is clearly an action against a debtor. It is not a levy against property but merely a bookkeeping entry noting a taxpayer's delinquency. After the assessment, the taxpayer is provided with notice and a demand for payment. If the taxpayer remains delinquent, then the IRS may proceed against the debtor's property. As the government recognizes, this means that the IRS cannot proceed against property in the bankruptcy estate because the debtor does not yet own that property. But in this case, the IRS has not taken any action against the property of the estate. Instead, it has only made an assessment against White. Thus § 362(c)(1) is inapplicable.
Having decided that the IRS assessment is valid, we further conclude that the Government is entitled to summary judgment.
1. White has adduced no evidence to disprove willfulness.
It is undisputed that as the president of WCC, Inc., White was responsible for withholding and paying to the IRS the income and social security taxes of his employees. Though a "responsible person" under § 6672, White may avoid liability if he can prove that his failure to pay was not willful.
2. The IRS assessment was not erroneous.
In reducing an assessment to judgment, the Government must first prove that the assessment was properly made.
While White identifies several purported errors in the Form, none of them seriously impeach the accuracy of the Government's allegations. The most obvious error in the Form 4340 is its showing of a final balance of $0. The reason for the erroneous balance was an error in the computer program that had completed the form. The computer program assumed that the statute of limitations had expired because it did not recognize that White's automatic stay had delayed the running of the statute of limitations. Thus, the final balance is little more than a typographical error. White has offered no evidence to suggest that the preceding entries themselves, listing the unpaid taxes, are incorrect.
As for the other alleged deficiencies in the Form to which White has pointed — such as the one-digit discrepancy between White's Social Security number as listed on the Certificate of Assessment itself and the number as listed on the Certificate of Official Record, certifying the assessment — they are similarly insignificant and do not address the issue of whether the IRS has miscalculated the amount that it claims White owes.
We also reject White's contention that the IRS is required to provide a Form 4340 for every quarter that it claims taxes were delinquent. Instead, a Form for the most recent quarter with a total for the delinquencies of the past quarters is sufficient for the Government to meet its burden of proving the validity of its assessment.
For the foregoing reasons, we reverse the judgment of the district court and remand with instructions to enter summary judgment for the Government.
As noted above, the 2005 amendment (delaying discharge until completion of payments under the plan) is not applicable in this case.
11 U.S.C. §524.
11 U.S.C. § 1141(d)(1) (1993). As noted above, the 2005 amendment, 11 U.S.C. §1141(d)(5) (2005) (no longer allowing confirmation itself to serve as discharge for individual debtors), is not applicable to this case.
The term, "any other act" in § 362(c)(2) means acts other than acts against the property of the estate. Thus, the term, "any other act," includes acts against the debtor.