No. 00-1567 

In the Supreme Court of the United States 

CORNELIUS P. YOUNG AND SUZANNE P. YOUNG, 
PETITIONERS 

v. 

UNITED STATES OF AMERICA 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE FIRST CIRCUIT 

BRIEF FOR THE UNITED STATES 

THEODORE B. OLSON 

Solicitor General 

Counsel of Record 

CLAIRE FALLON 

Acting Assistant Attorney 

General 

LAWRENCE G. WALLACE 

Deputy Solicitor General 

KENT L. JONES 

Assistant to the Solicitor 

General 

BRUCE R. ELLISEN 
THOMAS J. SAWYER 

Attorneys 

Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

QUESTION PRESENTED 

Whether the three-year lookback period for deter- 
mining the priority and nondischargeability of taxes 
pursuant to Sections 507(a)(8)(A)(i) and 523(a)(1)(A) of 
the Bankruptcy Code, 11 U.S.C. 507(a)(8)(A)(i), 
523(a)(1)(A), is tolled during the pendency of a debtor’s 
prior bankruptcy case. 

(I) 

TABLE OF CONTENTS 

Page 

Opinions below ............................................................................... 
1 

Jurisdiction ...................................................................................... 1 

Statutes involved ........................................................................... 
2 

Statement ........................................................................................ 3 

Argument ........................................................................................ 7 

Conclusion ....................................................................................... 15 

TABLE OF AUTHORITIES 

Cases: 

Clark, In re, 184 B.R. 728 (Bankr. N.D. Tex. 

1995) ......................................................................................... 14 

Hollowell, In re, 222 B.R. 790 (Bankr. N.D. Miss. 

1998) ......................................................................................... 12, 14 

Miller, In re, 199 B.R. 631 (Bankr. S.D. Tex. 

1996) ......................................................................................... 14 

Montoya, In re, 965 F.2d 554 (7th Cir. 1992) ........... 

6, 7, 11, 12 

Morgan, In re, 182 F.3d 775 (11th Cir. 1999) ................ 

7, 13, 14 

Nolan, In re, 205 B.R. 885 (Bankr. M.D. Tenn. 

1997) ......................................................................................... 14 

Palmer, In re, 219 F.3d 580 (6th Cir. 2000) ................... 

7, 13, 14 

Quenzer, In re, 19 F.3d 163 (5th Cir. 1993) ......................... 

7, 14 

Richards, In re, 994 F.2d 763 (10th Cir. 1993) ......... 

7, 11, 12, 13 

Taylor, In re, 81 F.3d 20 (3d Cir. 1996) ...................... 

6, 7, 11, 12 

Waugh, In re, 109 F.3d 489 (8th Cir.), cert. denied, 

522 U.S. 823 (1997) ............................................. 

6, 7, 10, 11, 12 

West, In re, 5 F.3d 423 (9th Cir. 1993), cert. denied, 

511 U.S. 1081 (1994) .................................................... 

6, 7, 11, 12 

Statutes: 

Bankruptcy Code, 11 U.S.C. 101 et seq.: 

11 U.S.C. 35(1) (Supp. II 1966) ....................................... 9 

(III) 

IV 

Statutes—Continued: Page 

Ch. 1 (11 U.S.C. 101 et seq.): 

11 U.S.C. 104(4) (Supp. II 1966) ..................................... 

9 

11 U.S.C. 105(a) ................................................................. 

2, 13 

11 U.S.C. 108(c) ...................................................... 

2, 6, 11, 12 

Ch. 3 (11 U.S.C. 301 et seq.): 

11 U.S.C. 362(a) ................................................................. 

2, 10 

11 U.S.C. 362(a)(6) ............................................................ 

3 

Ch. 5 (11 U.S.C. 501 et seq.): 

11 U.S.C. 507 ...................................................................... 

2, 9 

11 U.S.C. 507(a) .................................................. 

11, 12, 13, 14 

11 U.S.C. 507(a)(8) ............................................. 

4, 6, 7, 8, 10 

11 U.S.C. 507(a)(8)(A)(i) .................................... 

4, 5, 9, 12, 15 

11 U.S.C. 507(a)(8)(A)(ii) ................................................. 

12 

11 U.S.C. 523 (1994 & Supp. V 1999) ............................. 

2 

11 U.S.C. 523(a)(1)(A) ...................................................... 

5, 9 

11 U.S.C. 523(a)(1)(B)(ii) .................................................. 

12 

Ch. 7 (11 U.S.C. 701 et seq.) ............................................ 

4, 5, 9, 10 

11 U.S.C. 727 ...................................................................... 

2 

11 U.S.C. 727(b) ................................................................. 

5, 9 

Ch. 13 (11 U.S.C. 1301 et seq.) .................................. 

3, 4, 10, 11 

11 U.S.C. 1307(b) ............................................................... 

4, 11 

11 U.S.C. 1322(a)(2) .......................................................... 

4 

11 U.S.C. 1326(a)(2) .......................................................... 

4 

Internal Revenue Code (26 U.S.C.): 

§ 6503(b) .............................................................................. 

6 

§ 6503(c) .............................................................................. 

11 

§ 6503(h) ...................................................................... 

3, 11, 12 

Miscellaneous: 

H.R. 333, 107th Cong., 1st Sess. (2001) ................................. 

8 

H.R. Rep. No. 687, 89th Cong., 1st Sess. (1965) .................. 
9 

H.R. Rep. No. 595, 95th Cong., 1st Sess. (1977) .................. 
10 

S. 420, 107th Cong., 1st Sess. (2001) ...................................... 
8 

S. Rep. No. 1158, 89th Cong., 2d Sess. (1966) ...................... 9, 10 

In the Supreme Court of the United States 

No. 00-1567 

CORNELIUS P. YOUNG AND SUZANNE P. YOUNG, 
PETITIONERS 

v. 

UNITED STATES OF AMERICA 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE FIRST CIRCUIT 

BRIEF FOR THE UNITED STATES 

OPINIONS BELOW 

The opinion of the court of appeals (Pet. App. 1a-11a) 
is reported at 233 F.3d 56. The opinion of the district 
court (Pet. App. 12a-13a) is unofficially reported at 
2000-2 U.S. Tax Cas. (CCH) ¶ 50,522. The opinion of 
the bankruptcy court (Pet. App. 14a-22a) is unofficially 
reported at 99-1 U.S.Tax Cas. (CCH) ¶ 50,553. 

JURISDICTION 

The judgment of the court of appeals was entered on 
December 1, 2000. The petition for a writ of certiorari 
was filed on March 1, 2001. The jurisdiction of this 
Court is invoked under 28 U.S.C. 1254(1). 

(1) 

2 

STATUTES INVOLVED 

In addition to Sections 507, 523 and 727 of the 
Bankruptcy Code, 11 U.S.C. 507, 523 (1994 & Supp. V 
1999), 727, which are set forth in relevant part at Pet. 1- 
3, the following statutes are involved in this case: 

1. 11 U.S.C. 105(a) provides, in relevant part: 

The court may issue any order, process, or 
judgment that is necessary or appropriate to 
carry out the provisions of this title. * * * 

2. 11 U.S.C. 108(c) provides, in relevant part: 

Except as provided in section 524 of this title, 
if applicable nonbankruptcy law * * * fixes a 
period for commencing or continuing a civil action 
in a court other than a bankruptcy court on a 
claim against the debtor, * * * and such period 
has not expired before the date of the filing of the 
petition, then such period does not expire until 
the later of— 

(1) the end of such period, including any 
suspension of such period occurring on or after 
the commencement of the case; or 

(2) 30 days after notice of the termination 
or expiration of the stay under section 362 

* * * of this title * * * with respect to such 
claim. 

3. 11 U.S.C. 362(a) provides, in relevant part: 

Except as provided in subsection (b) of this 
section, a petition filed under section 301, 302, or 
303 of this title * * * operates as a stay, 
applicable to all entities, of— 

3 

(6) any act to collect, assess, or recover a 
claim against the debtor that arose before the 
commencement of the case under this title 

* * * . 

4. 26 U.S.C. 6503(h) provides, in relevant part: 

The running of the period of limitations pro- 
vided in section 6501 or 6502 [of the Internal 
Revenue Code] on the making of assessments or 
collection shall, in a case under title 11 of the 
United States Code, be suspended for the period 
during which the Secretary is prohibited by 
reason of such case from making the assessment 
or from collecting * * * . 

STATEMENT 

1. a. Petitioners requested and obtained an exten- 
sion of time for filing their 1992 federal income tax 
return until October 15, 1993. They filed their return 
within that extended period but did not pay the amount 
that they acknowledged was due. Pet. App. 16a. The 
United States was able to collect only a portion of these 
past-due taxes before May 1, 1996. On that date, peti- 
tioners filed a petition for relief under Chapter 13 of the 
Bankruptcy Code. Id. at 2a. Upon the commencement 
of that bankruptcy case, the United States was barred 
by the “automatic stay” imposed under Section 
362(a)(6) of the Bankruptcy Code from taking “any act 
to collect” the remaining unpaid taxes. 11 U.S.C. 
362(a)(6). At the same time, the statute of limitations 
for the collection of these taxes was “suspended for the 
period during which” the automatic stay remained in 
effect. 26 U.S.C. 6503(h). 

Every plan for administration of a Chapter 13 bank- 
ruptcy case must include a provision for making pay- 

4 

ment in full of the tax claims that are “priority” claims 
under Section 507 of the Bankruptcy Code. 11 U.S.C. 
1322(a)(2). The tax claims given “priority” under 
Section 507 include income taxes for tax years for which 
the return was due (including extensions) no more 
than “three years before the date of the filing of the 
[bankruptcy] petition.” 11 U.S.C. 507(a)(8)(A)(i) [here- 
inafter referred to as the “three-year lookback period” 
of Section 507(a)(8)]. Because petitioners’ Chapter 13 
bankruptcy case was filed less than three years after 
October 15, 1993—when their tax return for the 1992 
tax year was due—petitioners were required to submit 
a Chapter 13 plan that provided for full payment of the 
government’s claim. Pet. App. 15a. 

b. Although petitioners submitted such a Chapter 13 
plan, they thereafter failed to seek or obtain confirma- 
tion of that plan. Pet. App. 16a. Instead, on October 23, 
1996 (eight days after the three-year lookback period of 
Section 507(a)(8) expired), petitioners filed a notice of 
dismissal of their Chapter 13 bankruptcy case. That 
dismissal was filed under the provision of Chapter 13 
that authorizes debtors to dismiss their cases volun- 
tarily at any time. Id. at 2a; see 11 U.S.C. 1307(b). 
When (as here) such a dismissal occurs before a plan is 
confirmed in a Chapter 13 case, any payments that have 
been made by the debtors to the Chapter 13 trustee are 
returned to the debtors. 11 U.S.C. 1326(a)(2). As a 
result, nothing was paid to the United States from the 
aborted Chapter 13 proceeding. 

2. Just before the formal order dismissing the 
Chapter 13 bankruptcy case was entered by the bank- 
ruptcy court, however, petitioners filed a second 
petition for relief in bankruptcy. Pet. App. 16a. The 
second petition was filed under Chapter 7 of the 
Bankruptcy Code. Chapter 7, unlike Chapter 13, does 

5 

not require full payment of priority tax claims. Instead, 
priority tax claims that are not paid in a Chapter 7 case 
are excepted from the discharge obtained by the debtor 
under Section 523(a)(1)(A) of the Bankruptcy Code. 11 
U.S.C. 523(a)(1)(A); see 11 U.S.C. 727(b). When, as 
here, the Chapter 7 case makes no provision for pay- 
ment of priority taxes, the government is free to seek 
collection of these taxes upon the expiration of the 
automatic stay of the bankruptcy case. 

In the present case, the government sought to collect 
the outstanding taxes owed by petitioners following the 
completion of the Chapter 7 case. In response, peti- 
tioners sought a determination from the bankruptcy 
court that the taxes they owe for their 1992 tax year 
were discharged in the Chapter 7 case. Pet. App. 16a. 
Petitioners asserted that these taxes were discharged 
in that second bankruptcy case because, (i) by the time 
that case was commenced (in 1997), more than three 
years had elapsed since the return for the 1992 tax year 
was due and that, (ii) as a result, the 1992 taxes were 
not “priority” taxes under Section 507(a)(8) and, (iii) 
that these taxes therefore were not excepted from 
discharge under Section 523(a)(1)(A). 

3. a. The bankruptcy court rejected petitioners’ 
contention. Pet. App. 14a-22a. The court agreed with 
the government that the taxes for 1992 were not 
discharged by the second bankruptcy case because the 
three-year lookback period under Section 507(a)(8) was 
tolled during the period in which the automatic stay 
was in effect during the first bankruptcy case. The 
court explained that the three-year lookback period of 
Section 507(a)(8) operates as a statute of limitations and 
is tolled by the provisions of the Bankruptcy Code and 
Internal Revenue Code that extend the statutes of 
limitations for collection of tax claims during the period 

6 

that the automatic stay is in effect. Id. at 19a (citing 11 
U.S.C. 108(c); 26 U.S.C. 6503(b)). The court adopted 
the “well reasoned” decisions of the numerous courts 
that have concluded that the three-year lookback pro- 
visions of Section 507(a)(8) are tolled in these circum- 
stances. Pet. App. 19a (citing, e.g., In re Waugh, 109 
F.3d 489 (8th Cir.), cert. denied, 522 U.S. 823 (1997); 
In re Taylor, 81 F.3d 20 (3d Cir. 1996); In re West, 5 
F.3d 423 (9th Cir. 1993), cert. denied, 511 U.S. 1081 
(1994); In re Montoya, 965 F.2d 554 (7th Cir. 1992)). 
The court emphasized that any other conclusion would 
result in “an absurd consequence unintended by Con- 
gress and would allow debtors to manipulate the bank- 
ruptcy system.” Pet. App. 19a, 20a. Because the 1992 
taxes thus remained priority taxes in the second 
bankruptcy case, the court held that these taxes were 
not discharged at the conclusion of that case and that 
the government’s collection activities were therefore 
proper. Id. at 21a-22a. 

b. The district court upheld the bankruptcy court’s 
ruling. Pet. App. 12a-13a. The court noted that, 
“[w]hile there is a minor split of authority, the decided 
majority, and better reasoned, approach is that arti- 
culated by” the bankruptcy court in this case. Id. at 
13a. 

4. The court of appeals affirmed. Pet. App. 1a-11a. 
The court concluded that, even in the absence of an 
express statutory provision tolling the three-year 
lookback period of Section 507(a)(8) during the period of 
the automatic stay of a prior bankruptcy, courts may 
adopt a tolling rule “to assure that the underlying aims 
of Congress are not frustrated by conduct that thwarts” 
the plain purpose of the statute. Id. at 8a. The court 
noted that “[v]irtually all of the circuit cases dealing 
with successive bankruptcy petitions and the three- 

7 

year lookback provision have chosen to supplement the 
statute” with a judge-made tolling rule, and that “[t]he 
most common rule, adopted by five circuits, is that the 
lookback period is automatically tolled during a prior 
bankruptcy.” Ibid. (citing In re Waugh, supra; In re 
Taylor, supra; In re West, supra; In re Montoya, supra; 
and In re Richards, 994 F.2d 763 (10th Cir. 1993)). The 
court observed that “three other circuits have held that 
the lookback period is not automatically tolled by a 
prior bankruptcy proceeding but that equitable con- 
siderations may permit tolling on a case-by-case basis.” 
Id. at 9a (citing In re Palmer, 219 F.3d 580 (6th Cir. 
2000); In re Morgan, 182 F.3d 775 (11th Cir. 1999); In re 
Quenzer, 19 F.3d 163 (5th Cir. 1993)). The court con- 
cluded, however, that it should “follow the majority 
view in favor of automatic tolling,” for that rule avoids 
“taxpayer manipulation” of the bankruptcy process and 
preserves the “full three years” that Congress gave 
the government “to assess and collect taxes.” Id. at 
6a, 9a. 

ARGUMENT 

The courts of appeals acknowledge that they are in 
direct conflict on the question presented in this case. As 
the First Circuit explained in its decision below, six of 
the courts of appeals have now concluded that the 
priority of federal taxes in a second-filed bankruptcy 
case may not be avoided by the voluntary filing and 
dismissal of the taxpayer’s first bankruptcy proceeding. 
Three other courts of appeals, however, have adopted 
the view that the facts and circumstances of each sepa- 
rate case are to be considered in applying an equitable 
tolling rule to the three-year lookback period of Section 
507(a)(8). Although the courts of appeals have con- 
sistently recognized that granting a discharge in the 

8 

second case would yield a result that Congress did not 
intend, they have disagreed as to the circumstances 
that justify tolling of the lookback period. Different 
rules have thus been applied to reach disparate results 
in different circuits. 

The question presented in this case arises with 
considerable frequency. Indeed, the use of successive 
bankruptcy petitions in an effort to avoid tax obli- 
gations has become such a widely known and commonly 
employed device that more than 150 cases are currently 
pending that present this same issue. The present case 
squarely presents the issue that has divided the circuits 
and would thus serve as an appropriate vehicle for the 
Court to resolve this recurring conflict. We therefore 
do not oppose the granting of the petition in this case. 

It is important to note, however, that the House and 
Senate have passed bills that would resolve this matter 
prospectively by amending the Bankruptcy Code to 
provide that the three-year lookback period of Section 
507(a)(8) is tolled and extended for any period in which 
the automatic stay was in effect in a prior bankruptcy 
case. See H.R. 333, 107th Cong., 1st Sess. § 705 (2001); 
S. 420, 107th Cong., 1st Sess. § 705 (2001). The pro- 
visions of these competing bankruptcy bills, however, 
have not yet been reconciled in conference. There is 
thus no guarantee that a bill will be enacted and signed 
into law either this year or in the foreseeable future.1 If 
the pending bankruptcy legislation were hereafter 
enacted, however, there would no longer be a pressing 
need for this Court’s resolution of the question 

1 A similar legislative solution to this recurring problem was 
advanced in bills introduced in prior Congresses that were not 
enacted into law. 

9 

presented in this case. Absent such legislation, review 
by this Court is warranted.2 

1. a. Sections 523(a)(1)(A) and 727(b) of the Bank- 
ruptcy Code provide a discharge for a Chapter 7 debtor 
of income taxes that do not qualify as “priority” tax 
claims under Section 507 of the Code. 11 U.S.C. 
523(a)(1)(A), 727(b). In turn, Section 507 provides that 
an income tax claim is not a “priority” claim if it is for a 
tax year for which the return was due more than three 
years prior to the filing of the bankruptcy case. 11 
U.S.C. 507(a)(8)(A)(i). Under these provisions, a debtor 
who files under Chapter 7 of the Bankruptcy Code may 
be discharged from income tax claims for tax years for 
which the return was due more than three years prior 
to the commencement of the bankruptcy case. 11 
U.S.C. 523(a)(1)(A); see 11 U.S.C. 507(a)(8)(A)(i). 

This “three-year lookback rule” was first enacted by 
Congress in 1966. Prior to 1966, unsecured tax claims 
had been accorded priority over the claims of other 
unsecured creditors without regard to when the tax 
claims accrued. See 11 U.S.C. 35(1), 104(4) (Supp. II 
1966); H.R. Rep. No. 687, 89th Cong., 1st Sess. 2 (1965); 
S. Rep. No. 1158, 89th Cong., 2d Sess. 2 (1966). Prior to 
the 1966 amendments, tax claims were also non- 
dischargeable in bankruptcy regardless of their age. 
S. Rep. No. 1158, supra, at 2. Congress became con- 
cerned, however, that tax claims were allowed to 
“accumulate and remain unpaid for long periods of 
time.” Id. at 4. This meant that the debtor’s “fresh 
start” could be burdened with “what may be an over- 
whelming liability for accumulated taxes.” Id. at 2. 
Congress thus determined in 1966 that it was necessary 

2 We will endeavor to inform the Court if relevant legislative 
developments occur during the pendency of this case. 

10 

to put “some time limit upon the extent of taxes ex- 
cepted from discharge,” as well as on the time period 
for which tax claims would retain priority over the 
claims of other creditors. Id. at 2, 4. In doing so, 
however, Congress emphasized that it did not intend to 
“create a tax evasion device” or unduly impair the 
effectiveness of the government’s tax collection efforts. 
Id. at 3-4. 

The balance that Congress struck—the three-year 
lookback period for the priority and nondischargeability 
of tax claims now set forth in Section 507(a)(8) of the 
Bankruptcy Code—was chosen to balance these 
competing interests. In re Waugh, 109 F.3d at 492. In 
particular, Congress specifically sought to avoid “[a]n 
open-ended dischargeability policy [that] would provide 
an opportunity for tax evasion through bankruptcy, by 
permitting discharge of tax debts before a taxing 
authority has an opportunity to collect any taxes due.” 
Ibid. (quoting H.R. Rep. No. 595, 95th Cong., 1st Sess. 
190 (1977)). 

b. Many debtors have recently claimed, however, 
that a loophole exists in the three-year lookback rule 
that permits them to employ successive bankruptcy 
cases to obtain a discharge of their income tax debts 
before the government has had a full three-year period 
to collect the unpaid taxes. The debtors’ theory in- 
volves the filing of multiple bankruptcy cases—usually 
a Chapter 13 bankruptcy followed by a Chapter 7 
liquidation. The first bankruptcy is often filed shortly 
after the government begins to take collection action 
against the debtor for delinquent taxes. Upon the filing 
of the first bankruptcy case, the “automatic stay” of 
Section 362(a) of the Bankruptcy Code bars all collec- 
tion activity. 11 U.S.C. 362(a). The debtor then main- 
tains the bankruptcy case in place until three years has 

11 

elapsed from the due date of his delinquent tax return. 
The debtor then dismisses the first bankruptcy case (as 
he is entitled to do in a Chapter 13 case; see 11 U.S.C. 
1307(b)) and immediately files a second bankruptcy 
case. By filing serial bankruptcy cases, the debtor is 
able to prevent the government from pursuing any 
collection actions throughout the three-year period that 
Congress had established for collections. See pages 4-5, 
supra. Unless the three-year lookback period of 
Section 507(a) is tolled during the first bankruptcy 
case—as a majority of courts have held it is—a debtor 
could thus preclude all tax collection efforts and still 
obtain a discharge of his unpaid taxes in the second 
bankruptcy case. 

2. The question whether debtors can use serial 
bankruptcy filings in this manner to prevent the collec- 
tion of taxes during the three-year lookback period 
has yielded starkly different conclusions in the lower 
courts. Nine circuits have splintered into several 
different camps on this issue. 

a. The majority of courts—including the court below 
—have held that the three-year period is automatically 
tolled during the first bankruptcy case when the debtor 
files multiple bankruptcy cases. Pet. App. 9a (“We 
follow the majority view in favor of automatic tolling.”); 
In re Waugh, 109 F.3d 489 (8th Cir.), cert. denied, 522 
U.S. 823 (1997); In re Taylor, 81 F.3d 20 (3d Cir. 1996); 
In re West, 5 F.3d 423 (9th Cir. 1993), cert. denied, 511 
U.S. 1081 (1994); In re Richards, 994 F.2d 763 (10th Cir. 
1993); In re Montoya, 965 F.2d 554 (7th Cir. 1992). 
These courts have relied on the statutes that allow 
extensions of time for collection of taxes during the 
period of bankruptcy proceedings (11 U.S.C. 108(c); 26 
U.S.C. 6503(c), (h)) and on the clear intent of Congress 
that, under the three-year lookback rule, the 

12 

government is to be allowed sufficient time to collect 
taxes before they can be discharged in bankruptcy 
cases.3 In re Waugh, 109 F.3d at 492; In re Taylor, 81 
F.3d at 23-24; In re West, 5 F.3d at 426.4 

These courts have emphasized that, to interpret 
these statutes in the manner suggested by the debtors 
would “defeat the statutory purpose of [both] the 
Bankruptcy Code [and] the Internal Revenue Code” 
and “would lead to absurd results, as the government 
would lose its priority claim to back taxes as a result of 
the taxpayer’s abuse of the bankruptcy process.” In re 
Taylor, 81 F.3d at 23. See also Pet. App. 6a; In re 
Waugh, 109 F.3d at 493; In re West, 5 F.3d at 425 (“in 
the rare cases [in which] the literal application of a 

3 The Internal Revenue Code suspends the limitations period 
for assessing and collecting taxes during the time that a taxpayer 
is in bankruptcy. 26 U.S.C. 6503(h). In addition, Section 108(c) of 
the Bankruptcy Code extends nonbankruptcy periods of limita- 
tions that had not expired when the bankruptcy case was com- 
menced. 11 U.S.C. 108(c). Several courts have concluded that 
these statutes apply, by reasonable inference, to the three-year 
lookback rule of Section 507(a) of the Bankruptcy Code. See In re 
Taylor, 81 F.3d at 23-25; In re Montoya, 965 F.2d at 557-558; In re 
Waugh, 109 F.3d at 494 (“11 U.S.C. § 108(c) and 26 U.S.C. § 6503(b) 
and (h) operate to suspend” the priority period); In re West, 5 F.3d 
at 426-427. 

4 The present case, like the great majority of cases presenting 
this issue, involves the question whether the three-year lookback 
period of Section 507(a)(8)(A)(i) should be tolled when a debtor has 
filed serial bankruptcies. A closely similar question arises with 
respect to the 240-day lookback period in Section 507(a)(8)(A)(ii) 
and the two-year lookback period set forth in Section 523(a)(1) 
(B)(ii). The courts have generally applied the same rule to all three 
lookback periods. See, e.g., In re West, 5 F.3d at 425 (240-day rule 
is tolled during serial bankruptcy filings); Richards, 994 F.2d at 
763 (240-day rule); In re Hollowell, 222 B.R. 790, 793 (Bankr. N.D. 
Miss. 1998) (tolling of two-year lookback rule). 

13 

statute will produce a result demonstrably at odds with 
the intentions of its drafters, the intention of the 
drafters . . ., rather than the strict language, controls.”) 
(internal quotation marks omitted). 

The Tenth Circuit has relied on a different rationale 
in holding that the three-year lookback period of 
Section 507(a) is always tolled during the pendency of a 
prior bankruptcy case. That court has held that the 
suspension of the three-year lookback period is author- 
ized by Section 105(a) of the Bankruptcy Code, which 
allows the bankruptcy courts to “issue any order, pro- 
cess, or judgment that is necessary or appropriate to 
carry out the provisions” of the Code. 11 U.S.C. 105(a). 
See In re Richards, 994 F.2d at 765. The Tenth Circuit 
concluded that, in order to accomplish the clear intent 
of Congress, tolling of this period is always “appro- 
priate to carry out the provisions” of the Code when 
multiple bankruptcies are employed to preclude the 
collection of taxes. Ibid. 

b. Three circuits do not follow the majority rule. In 
re Palmer, 219 F.3d 580 (6th Cir. 2000); In re Morgan, 
182 F.3d 775 (11th Cir. 1999); In re Quenzer, 19 F.3d 163 
(5th Cir. 1993)). These courts “have held that the look- 
back period is not automatically tolled by a prior bank- 
ruptcy proceeding but that equitable considerations 
may permit tolling on a case-by-case basis.” Pet. App. 
9a. As the court below correctly explained in this case 
(ibid.): 

The Eleventh Circuit states that the equities will 
usually favor the government [In re Morgan, 182 
F.3d at 779-780]; the Sixth seems to require a show- 
ing of debtor misconduct [In re Palmer, 219 F.3d at 
585]; and the Fifth agnostically demands a “[f]ull 

14 

development and examination of the facts.” [In re 
Quenzer, 19 F.3d at 165]. 

Thus, while these three courts have joined in allow- 
ing equitable tolling of the three-year lookback period 
under Section 105(a) of the Bankruptcy Code, they have 
done so only when they believe such tolling to be 
warranted by examination of the particular facts of the 
case. In evaluating the relevant facts, moreover, they 
have not followed a single approach in determining 
when such tolling would be appropriate. 

For example, the Eleventh Circuit has suggested 
that a presumption exists that such tolling will be 
appropriate in cases in which the debtor’s multiple 
bankruptcies have prevented the government from 
collecting the outstanding taxes. In re Morgan, 182 
F.3d at 780. The Fifth Circuit has applied a far more 
stringent standard. Tolling in that circuit is permitted 
only when the debtor (i) acted in a calculated manner in 
dismissing and refiling bankruptcy cases or (ii) con- 
sciously employed the automatic stay to shield himself 
from collection activity. In re Hollowell, 222 B.R. 790 
(Bankr. N.D. Miss. 1998); In re Miller, 199 B.R. 631 
(Bankr. S.D. Tex. 1996); In re Clark, 184 B.R. 728 
(Bankr. N.D. Tex. 1995). The Sixth Circuit has adopted 
the most restrictive view of tolling. That court 
concluded that tolling would be appropriate only when 
the government shows that the debtor committed 
specific misconduct or intentionally manipulated the 
bankruptcy process. In re Palmer, 219 F.3d at 585, 587 
(citing In re Nolan, 205 B.R. 885, 888 (Bankr. M.D. 
Tenn. 1997)).5 

5 The Eleventh Circuit expressly rejected the standard 
adopted by the Sixth Circuit, holding that “we reject the notion 

* * * that a finding of dilatory conduct or bad faith is necessary to 

15 

3. We thus agree with petitioners that there exists a 
conflict among the circuits on the question whether the 
three-year lookback period of 11 U.S.C. 507(a)(8)(A)(i) 
should be tolled during the pendency of a prior bank- 
ruptcy case. We also agree with petitioners that this 
issue is one that has recently been raised frequently by 
taxpayers who seek to avoid their tax debts in bank- 
ruptcy cases. Unless the curative legislative proposals 
that are currently pending are enacted by Congress 
(see page 8, supra), resolution by this Court of this 
recurring question on which the courts of appeals are 
sharply divided is warranted. 

CONCLUSION 

The petition for a writ of certiorari should be 
granted. 

Respectfully submitted. 

THEODORE B. OLSON 

Solicitor General 

CLAIRE FALLON 

Acting Assistant Attorney 

General 

LAWRENCE G. WALLACE 

Deputy Solicitor General 

KENT L. JONES 

Assistant to the Solicitor 

General 

BRUCE R. ELLISEN 
THOMAS J. SAWYER 

Attorneys 

JUNE 2001 

find the equities in favor of the government.” In re Morgan, 182 
F.3d at 780 n.8.