MARTIN RAMOS DELGADO

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
In re: :
:
MARTIN RAMOS DELGADO, : Case No. 05-01539(GAC)
:
:
Debtor : Chapter 13
___________________________________:
DECISION AND ORDER
I. Background
On February 24, 2005, the debtor Martin Ramos Delgado
(“Ramos”) filed a petition under Chapter 13 of the Bankruptcy Code.
The Puerto Rico Department of Treasury (“Treasury”) filed Proof of
Claim #9 for the amount of $51,133.74, including the sum of
$47,442.51 as a priority, pertaining to tax year 2001.
On August 10, 2005, Ramos filed an Objection to Proof of Claim
#9 (Docket #15). Ramos asserts that 11 U.S.C. § 507(a)(8)(A)(i)
contemplates as priority years only three years prior to the filing
of the bankruptcy petition. Ramos alleges that since he filed his
tax return for year 2004 before the filing of his bankruptcy
petition, the priority years under 11 U.S.C. § 507(a)(8)(A)(i)
should be 2002, 2003 and 2004. Ramos argues that year 2001
supersedes the three-year look back period. He also contends that
not to consider year 2004 as part of the priority period when he
already filed his tax return for that year, will signify that the
three year period established in § 507(a)(8)(A)(i) will be four
years instead of three. Ramos contends that since Treasury
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included22 2001 as a priority tax year, the proof of claim should
be disallowed.
On September 7, 2005, Treasury filed a Reply to the Objection
to Proof of Claim #9 (Docket #19), asserting that 11 U.S.C. §
507(a)(8)(A)(i) grants priority status to taxes pertaining to
returns due within three years of the petition date. Treasury
maintains that taxes for years 2001, 2002 and 2003 are entitled to
priority status, and not year 2004 because the tax return for 2004
was not due until April 15, 2005, which was after the petition was
filed. Treasury contends that applicable local law determines the
due date, which is April 15 of the following year for a calendar
year taxpayer.
On the same day, Ramos filed a Sur-Reply (Docket #20),
asserting that his tax return for year 2004 was filed prior to the
filing of the petition and arguing that even though the taxpayer
has until April 15, 2005 of the taxable year, since he filed it
before the due date, the tax for year 2004 is entitled to priority
status and not the tax for year 2001.
Treasury filed a Reply on October 25, 2005 (Docket #23).
Treasury contends that Ramos’ interpretation of § 507 (a)(8)(A)(i)
goes against the plain language of the statute and thus should be
rejected. Finally, Treasury states that it did not locate case law
interpreting § 507(a)(8)(A)(i). However, it insists that this is
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because the language is so unequivocal and clear that it has simply
not been the subject of published judicial scrutiny.
Finally, on October 27, 2005, Ramos filed a Second Sur Reply
(Docket #24), contending that he filed the tax return for 2004 and
that even though a tax payer has until April 15 of the taxable
year, he submitted himself to the jurisdiction of the Treasury
Department and thus 2004 should be the year entitled to priority
status rather than 2001.
II. DISCUSSION
A. Section 507(a)(8)(A)(i)
Section 507(a) sets forth ten categories of expenses and
claims that are entitled to priority in bankruptcy cases. The
present case arises under the eighth priority, Section 507(a)(8),
which includes:
allowed unsecured claims of governmental
units, only to the extent that such
claims are for-
(A) a tax on or measured by income
or gross receipts-
(i) for a taxable year ending
on or before the date of the
filing of the petition for
which a return, if required, is
last due, including extensions,
after three years before the
date of the filing of the
petition.
11 U.S.C. sec 507(a)(8)(A)(i).
As explained by the United States Supreme Court, the
preeminent canon of statutory interpretation requires the courts to
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“presume that the legislature says in a statute what it means and
means in a statute what it says there”. BedRoc Ltd., LLC v. U.S.,
541 U.S. 176 (2004) (citing Connecticut Nat. Bank v. Germain, 503
U.S. 249 (1992)). “Thus, our inquiry begins with the statutory
text, and ends there as well if the text is unambiguous.” Lamie v.
United States Trustee, 540 U.S. 526, 534 (2004). “Where, as here,
the statute's language is plain, ‘the sole function of the courts
is to enforce it according to its terms.’” U.S. v. Ron Pair
Enterprises, Inc., 489 U.S. 235, 241 (1989)(quoting Caminetti v.
U.S., 242 U.S. 470, 485 (1917)).
The statute clearly states that the three year period for
calculation of priority status, is measured from the date in which
the return is “last due.” 11 U.S.C. § 507(a)(8)(A)(i). Pursuant to
the laws of Puerto Rico, the due date for the filing of income tax
returns, is on or before the 15th of April following the close of
the calendar year. See 13 L.P.R.A. § 8453. Consistent with this
interpretation, in explaining § 507(a)(8)(A)(i), a leading treatise
on bankruptcy states:
This subsection applies only to taxable years
ending on or before the petition date. If the
tax return for the particular tax is due
within three years before the petition date,
the tax will be entitled to priority....
***
In determining the scope of section
507(a)(8)(A)(i) priority, the operative date
is the date on which the tax return was due
and not the date that the return was actually
filed.... [stated another way] [t]he
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measuring date is not when the return was
filed, but when it was last due.
4 Collier on Bankruptcy § 507.10(2)(a), p. 507-68.
Thus, this Court concludes that the plain language of the
statute requires that the tax returns that have priority are those
that are due for the three years prior to the filing of the
petition. Thus, when Ramos filed for bankruptcy on February 24,
2005, the tax returns due were for years 2001, 2002 and 2003, and
not the tax return for year 2004 because it was not due until April
15, 2005, after the filing of the petition. Accordingly, Proof of
Claim #9 will be allowed as filed.
ORDER
WHEREFORE IT IS ORDERED that Ramos’ objection to Proof of
Claim #9 (Docket # 15) shall be, and hereby is, Denied.
SO ORDERED.
San Juan, Puerto Rico, this 10th day of May, 2006.
S/Gerardo A. Carlo-Altieri
_____________________________
GERARDO A. CARLO-ALTIERI
Chief, U.S. Bankruptcy Judge
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