3.4.a The Five Rules For Discharge In Chapter 13

• Jurisdiction: United States

a. Penalties

Tax penalties are never priority.¹⁷⁵ BAPCPA's elimination of the "super-discharge" for taxes and interest in Chapter 13 did not affect the super-discharge for penalties. Tax penalties are nondischargeable in Chapter 7 if the events triggering the penalties are under three years old pursuant to 11 § 523(a)(7)(B). (see § 2.7). Prior to bankruptcy reform a penalty that was caught in the § 523 net, which while nondischargeable in Chapter 7, was nonetheless dischargeable in Chapter 13 simply because the list of exceptions to discharge in Chapter 13 found in 11 U.S.C. § 1328(a) did not include tax penalties. The Reform Act, while adding several categories of claims, including tax debts, falling within § 523 to the list of exceptions from discharge in Chapter 13, did not add tax penalties (falling under § 523(a)(7)) to the list of exceptions. Hence, tax penalties remain non-priority, fully dischargeable claims...