United States v. Reorganized Cf&i Fabricators of Utah, Inc., et al. (518 U.S. 213)
U.S. Supreme Court · decided June 20, 1996 · Supreme Court Database (Spaeth)
- Citation
- 518 U.S. 213 · 116 S. Ct. 2106
- Decided
- June 20, 1996
- Term
- October Term 1995
- Vote
- 9–0
- Majority author
- Justice Souter
- Issue area
- Federal Taxation
- Disposition
- Vacated and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Justice Souter delivered the opinion of the Court. This case presents two questions affecting the priority of an unsecured claim in bankruptcy to collect an exaction under 26 U. S. C. § 4971(a), requiring a payment to the Internal Revenue Service equal to 10 percent of any accumulated funding deficiency of certain pension plans: first, whether the exaction is an “excise tax” for purposes of 11 U. S. C. § 507(a)(7)(E) (1988 ed.), which at the time relevant here gave seventh priority to a claim for such a tax; and, second, whether principles of equitable subordination support a categorical rule placing §4971 claims at a lower priority than unsecured claims generally. We hold that § 4971(a) does not create an excise tax within the meaning of § 507(a)(7)(E), but that categorical subordination of the Government’s claim to those of other unsecured creditors was error. I The CF&I Steel Corporation and its nine subsidiaries (CF&I) sponsored two pension plans, with the consequence that CF&I was obligated by the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 935, 29 U. S. C. § 1001 et seq., to make certain annual minimum funding contributions to the plans based on the value of the benefits earned by its employees. See § 1082; 26 U. S. C. § 412. The annual payments were due each September 15th for the preceding plan year, see 26 CFR § 11.412(c)-12(b) (1995), and on…
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