OCTOBER TERM, 1995
Syllabus
certiorari to the united states court of appeals for the tenth circuit
No. 95-325. Argued March 25, 1996—Decided June 20, 1996
The Employee Retirement Income Security Act of 1974 obligated CF&I Steel Corporation and its subsidiaries (CF&I) to make certain annual funding contributions to pension plans they sponsored. The required contribution for the 1989 plan year totaled some $12.4 million, but CF&I failed to make the payment and petitioned the Bankruptcy Court for Chapter 11 reorganization. The Government filed, inter alia, a proof of claim for tax liability arising under § 4971(a) of the Internal Revenue Code, 26 U. S. C. § 4971(a), which imposes a 10 percent "tax" (of $1.24 million here) on any "accumulated funding deficiency" of plans such as CF&I's. The court allowed the claim but rejected the Government's argument that the claim was entitled to seventh priority as an "excise tax" under § 507(a)(7)(E) of the Bankruptcy Code, 11 U. S. C. § 507(a)(7)(E), finding instead that § 4971 created a penalty that was not in compensation for pecuniary loss. The Bankruptcy Court also subordinated the § 4971 claim to those of all other general unsecured creditors, on the supposed authority of the Bankruptcy Code's provision for equitable subordination, 11 U. S. C. § 510(c), and later approved a reorganization plan for CF&I giving lowest priority (and no money) to claims for noncompensatory penalties. The District Court and the Tenth Circuit affirmed.
Held: 1. The "tax" under § 4971(a) was not entitled to seventh priority as an "excise tax" under § 507(a)(7)(E), but instead is, for bankruptcy purposes, a penalty to be dealt with as an ordinary, unsecured claim. Pp. 218-226. (a) Here and there in the Bankruptcy Code Congress has referred to the Internal Revenue Code or other federal statutes to define or explain particular terms. It is significant that Congress included no such reference in § 507(a)(7)(E), even though the Bankruptcy Code provides no definition of "excise," "tax," or "excise tax." This absence of any explicit connection between §§ 507(a)(7)(E) and 4971 is all the more revealing in light of this Court's history of interpretive practice in determining whether a "tax" so called in the statute creating it is also a "tax" for the purposes of the bankruptcy laws. Pp. 219-220.
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