Two Valid Approaches for Determining Whether “Taxes” Get Priority in Bankruptcy Cases

(Excerpt) In bankruptcies, tax status often effects whether claims are entitled to priority. Thus, debates about whether charges are penalties or taxes date back to the early twentieth century. In 1930, the Supreme Court established that courts are not bound to the characterization given to a charge by the municipality that created it. Rather, courts have a duty to consider the “real nature” and “effect” of the charge. Accordingly, different circuits have implemented different approaches to make these determinations. This Article examines the ambiguity among circuits regarding charges’ “tax” status and resulting priority entitlement. Part I outlines In re Lorber’s multi-factor test in the Ninth Circuit. Part II outlines In re Peete’s functional examination test in the Seventh Circuit. Part III examines the tests’ similarities and differences. The Article concludes by contextualizing the concurrent validity of both approaches

Circumstances in Which a Fee is an Excise Tax Entitled to Priority

(Excerpt) Title 11 of the United States Code (the “Bankruptcy Code”) enumerates several categories in which claims are entitled to receive priority. Indeed, Section 507(a)(8)(E) grants governmental units priority on obligations that are “excise tax[es] on a transaction.” The Bankruptcy Code, however, does not define the universe of circumstances necessary to fall within the excise tax priority category. Governmental units therefore spend considerable efforts litigating to ensure that their claims are granted priority under the Bankruptcy Code. Ultimately, the success of a claim will hinge on how narrowly or broadly a court interprets Section 507(a)(8)(E). Part I of this memorandum explores the different approaches courts use to determine what constitutes an excise tax. Part II discusses the approaches adopted in different jurisdictions to analyze an excise tax for bankruptcy purposes. Last, Part III addresses what constitutes a transaction as required for priority under the Bankruptcy Code

In Re: United

USDC for the District of New Jerse

State User Fees and the Dormant Commerce Clause

The law takes shape as great principles collide in the context of concrete cases. In the field of constitutional law, the task of reconciling key precepts falls, of necessity, to the Supreme Court. Indeed, much of the Court\u27s work involves delineating the borders of competing constitutional principles that the Court itself has created. This Article considers the interplay of two central tenets of the Court\u27s dormant commerce clause jurisprudence. The first of these principles exempts from the general proscription on discrimination against interstate commerce a state\u27s actions as a market participant, rather than as a market regulator. \u27 The second principle, in contrast, renders the nondiscrimination rule fully applicable to the imposition of state user fees. Part II of this Article shows why these doctrinal pronouncements stand in an unsteady tension. It also explains how this tension revealed itself in Oregon Waste Systems, Inc. v. Department of Environmental Quality of Oregon, when two dissenters attacked the majority for overriding the market-participant exception by outlawing state discrimination in fixing public-landfill fees. Part III explains why the dissenters\u27 reading of Oregon Waste Systems was misguided. Although that decision pointed up the long-latent strain between the Court\u27s market-participant and user-fee cases, it did not resolve-in the public landfill context or otherwise-the ostensible contradiction created by these competing bodies of law. Part IV explains how this doctrinal conflict could emerge. For years the Court has treated state tax cases and state regulation cases as falling into distinct analytical categories for dormant commerce clause purposes. Part IV shows how the creation of this doctrinal dichotomy may have led the Court to gloss over the intrinsic incompatibility of its broadly stated market-participant and user-fee rules. Finally, Part V offers what the Supreme Court has not yet provided: a synthesis of these clashing principles that comports with both existing caselaw and sound dormant commerce clause poicy. Close inspection reveals that, although the Court has declared the user-fee anti-discrimination rule in categorical terms, it actually has applied that rule only to state charges associated with roads, airports, and other channels of interstate movement. These decisions are correct, according to the synthesis proposed in this Article, because of the compelling need to safeguard access to the essential avenues of inter-state trade. This channels-of-commerce principle, however, does not dictate that states must make public landfills-as well as many other government facilities unconnected with interstate move- in the absence of preemptive federal legislation. Under this rule, for example, a state may not inhibit sales by traveling representatives of nonresident firms to give a competitive edge to local retailers. Likewise, a state may not impose a greater tax on nonresident buyers of private landfill services than it imposes on similarly situated residents