The Employer Shared Responsibility Payment (ESRP) MFT 43 liability is treated as an excise tax. . Unless secured by a valid NFTL, the ESRP MFT 43 assessment is considered a priority claim under 11 USC 507(a)(8)(E) if the liability arose pre-petition and less than 3 years from the petition date. See If not secured by a valid NFTL and theESRP MFT 43 liability arose more than 3 years prior to the petition date, the liability is unsecured general.
The enrollment date and the Letter 226-J issuance date need to be considered when determining if a liability is pre-petition or post-petition claim. In some cases, the IRS will file both types of claims to protect the IRS’s interests and ensure the IRS has filed a timely claim. See IRM 5.9.4.19.2(10) , Determining if the ESRP Liability is Pre-Petition/Post-Petition. The enrollment date is usually November 1st of the year before the ESRP year. The date the Letter 226-J was issued is identified by a TC 971 AC 782 in the MFT 43 module.
Individual Chapter 11 Cases. Post-petition/pre-confirmation ESRP MFT 43 liabilities owed by an individual debtor who is an applicable large employers (ALE) sole-proprietor qualify as an administrative expense of the Chapter 11 estate if the estate was the employer for the purposes of the ESRP. If the post- petition/pre-confirmation ESRP MFT 43 liability was incurred by the estate, it can be claimable as an administrative expense on Form 6338-A(C), Request for Payment of Internal Revenue Taxes.
Non-Individual Chapter 11 Cases. In Chapter 11 non-individual cases, the bankruptcy estate is not a separate taxable entity. Post-petition/pre-confirmation ESRP MFT 43 liabilities owed by the non-individual debtor in a Chapter 11 case are claimable as administrative expenses on Form 6338-A(C), Request for Payment of Internal Revenue Taxes.
If the ESRP liability is a pre-petition liability that arose three years before the petition date, it is a priority excise tax debt (unless secured by a NFTL).
Individual Chapter 11 Cases. Pre-petition ESRP priority taxes in individual Chapter 11 cases are excepted from discharge pursuant to 11 USC 523(a)(1)(A) unless the confirmed plan provides otherwise. Any portion of the post-petition ESRP (whether incurred by the estate or the debtor) that should have been paid under the plan will be non-dischargeable.
Non-Individual Chapter 11 Cases. In reorganizing Chapter 11 cases of non-individual debtors, debtors generally receive a "super discharge" of pre-confirmation tax debts when the Chapter 11 plan is confirmed except to the extent that the plan or confirmation order provides otherwise (11 USC 1141(d)(1)(A))
