3.17.a In General

• Jurisdiction: United States

a. Binding on taxing entity

Where the taxing entity has made no timely objection to confirmation and the plan is confirmed, the majority rule is that it is barred from objecting and is subject to the terms of the plan. See: 11 U.S.C. § 1327 (a); In re Norton, 15 B.R. 623 (Pa. 1981); U.S. v. Norton, 717 F.2d 767 (1984); In re Hebert, 61 B.R. 44 (La. 1986); In re Moseley, 74 B.R. 791 (1987) (vacated); In re Alexander, 31 B.R. 389 (Ohio, 1983); In re Jones, 134 B.R. 274 (N.D. Ill. 1991) ("While Government is free to ignore bankruptcy proceedings of which it has notice, Government does so at its peril"); and see non-tax cases In re Chattanooga Wholesale Antiques, Inc., 930 F.2d 458 (6th Cir. 1991) (confirmation of a plan is res judicata and bars relitigation of any issues raised or that could have been raised in confirmation proceedings); Hendrick v. Avent, 891 F.2d 583 (5th Cir. 1990); Magallanes v. Williams (In re Magallanes), 96 B.R. 253 (9th Cir. BAP 1988); Latham v. Wells Fargo Bank, N.A., 896 F.2d 979 (5th Cir. 1990).

This is acknowledged by the IRS.²³⁶

See, for example, Young v. I.R.S., 132 B.R. 395 (S.D. Ind. 1990) where the deb-tor's confirmed Chapter 13 plan characterized certain prepetition interest accrued on a priority tax claim as a general unsecured, non-priority claim. It was confirmed without objection by the IRS, but the IRS proof of claim characterized the interest as a priority claim. Following confirmation the IRS moved for reconsideration. Denying this request, the court said " ... the Bankruptcy Code expresses a strong interest in according finality to confirmed Chapter 13 plans by treating them as res judicata as to all...