U.S. Code » Title 11 » Chapter CHAPTER 12— ADJUSTMENT OF DEBTS OF A FAMILY FARMER OR FISHERMAN WITH REGULAR ANNUAL INCOME › Subchapter SUBCHAPTER II— THE PLAN

11 U.S.C. § 1232

Claim by a governmental unit based on the disposition of property used in a farming operation

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(a) Any unsecured claim of a governmental unit against the debtor or the estate that arises before the filing of the petition, or that arises after the filing of the petition and before the debtor’s discharge under section 1228, as a result of the sale, transfer, exchange, or other disposition of any property used in the debtor’s farming operation—(1) shall be treated as an unsecured claim arising before the date on which the petition is filed;(2) shall not be entitled to priority under section 507;(3) shall be provided for under a plan; and(4) shall be discharged in accordance with section 1228.(b) For purposes of applying sections 1225(a)(4), 1228(b)(2), and 1229(b)(1) to a claim described in subsection (a) of this section, the amount that would be paid on such claim if the estate of the debtor were liquidated in a case under chapter 7 of this title shall be the amount that would be paid by the estate in a chapter 7 case if the claim were an unsecured claim arising before the date on which the petition was filed and were not entitled to priority under section 507.(c) For purposes of applying sections 523(a), 1228(a)(2), and 1228(c)(2) to a claim described in subsection (a) of this section, the claim shall not be treated as a claim of a kind specified in subparagraph (A) or (B) of section 523(a)(1).(d)(1) A governmental unit may file a proof of claim for a claim described in subsection (a) that arises after the date on which the petition is filed.(2) If a debtor files a tax return after the filing of the petition for a period in which a claim described in subsection (a) arises, and the claim relates to the tax return, the debtor shall serve notice of the claim on the governmental unit charged with the responsibility for the collection of the tax at the address and in the manner designated in section 505(b)(1). Notice under this paragraph shall state that the debtor has filed a petition under this chapter, state the name and location of the court in which the case under this chapter is pending, state the amount of the claim, and include a copy of the filed tax return and documentation supporting the calculation of the claim.(3) If notice of a claim has been served on the governmental unit in accordance with paragraph (2), the governmental unit may file a proof of claim not later than 180 days after the date on which such notice was served. If the governmental unit has not filed a timely proof of the claim, the debtor or trustee may file proof of the claim that is consistent with the notice served under paragraph (2). If a proof of claim is filed by the debtor or trustee under this paragraph, the governmental unit may not amend the proof of claim.(4) A claim filed under this subsection shall be determined and shall be allowed under subsection (a), (b), or (c) of section 502, or disallowed under subsection (d) or (e) of section 502, in the same manner as if the claim had arisen immediately before the date of the filing of the petition.(Added Pub. L. 115–72, div. B, § 1005(a), Oct. 26, 2017, 131 Stat. 1232.)Statutory Notes and Related SubsidiariesEffective Date

Section applicable to bankruptcy cases pending on Oct. 26, 2017, in which the plan under this chapter has not been confirmed on Oct. 26, 2017, and relating to which an order of discharge under section 1228 of this title has not been entered, and to bankruptcy cases that commence on or after Oct. 26, 2017, see section 1005(c) of Pub. L. 115–72, set out as an Effective Date of 2017 Amendment note under section 1222 of this title.

Notes of Decisions
Cited in 12 cases (8 in the last 5 years), 2018–2026 · leading case: In re Pedersen, 593 B.R. 785 (Bankr. D. Iowa 2018).
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In re Pedersen, 593 B.R. 785 (Bankr. D. Iowa 2018). · cites it 7× “Although tax claims are typically given priority over other unsecured claims in bankruptcy, Chapter 12 contains an exception to this rule in 11 U.S.C. § 1232 , commonly called the "priority-stripping" provision.”
In re Schroeder Bros. Farms of Camp Douglas LLP, 602 B.R. 695 (Bankr. W.D. Wis. 2019). “11 U.S.C. § 1232 . For a step-by-step chart on applying Form 8832, see Internal Revenue Serv.”
Philip Charles DeVries & Angie Marie DeVries (Bankr. D. Iowa 2020). · cites it 6× “Debtors argue that under 11 U.S.C. § 1232 (a) income tax debt arising from the sale of farming property cannot be offset against tax collected already, and that collected taxes must be returned to the bankruptcy estate.”
Iowa Dept. of Revenue v. Philip DeVries (8th Cir. BAP 2020). · cites it 4× “11 U.S.C. §1232 (a) (emphasis added).1 “It is well established that ‘when the statute's language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.”
United States v. RICHARDS (S.D. Ind. 2021). · cites it 3× “Specifically, the United States objects to the Bankruptcy Court's application of 11 U.S.C. § 1232 , a provision of the Bankruptcy Code which governs the treatment of unsecured claims of the government arising "after the filing of the petition and before the debtor's discharge ……”
United States v. RICHARDS (S.D. Ind. 2021). · cites it 2× “11 U.S.C. § 1232 (a). The "goal" of the statute as described at the time it was introduced on the Senate floor was to "relieve family farmers from having their reorganization plans fail because of certain tax liabilities owed to the government.”
In re: Barry Vernon Barnett & Cortney Baugh Barnett; In re: Travis Parson & Casey Parson; In re: Dennis Hayes; In re: Steven Walker & Keisha Walker (Bankr. E.D. Mo. 2026). · cites it 2× “11 U.S.C. § 1232 (a). The section derives from the former Section 1222(a)(2)(A), which Congress modified and relocated in a 2017 bill intended to overrule the Supreme Court’s interpretation of the statute in Hall v.”
In re: Barry Vernon Barnett & Cortney Baugh Barnett; In re: Travis Parson & Casey Parson; In re: Dennis Hayes; In re: Steven Walker & Keisha Walker (Bankr. E.D. Mo. 2026). · cites it 2× “11 U.S.C. § 1232 (a). The section derives from the former Section 1222(a)(2)(A), which Congress modified and relocated in a 2017 bill intended to overrule the Supreme Court’s interpretation of the statute in Hall v.”
In re: Barry Vernon Barnett & Cortney Baugh Barnett; In re: Travis Parson & Casey Parson; In re: Dennis Hayes; In re: Steven Walker & Keisha Walker (Bankr. E.D. Mo. 2026). · cites it 2× “11 U.S.C. § 1232 (a). The section derives from the former Section 1222(a)(2)(A), which Congress modified and relocated in a 2017 bill intended to overrule the Supreme Court’s interpretation of the statute in Hall v.”
Dennis Riley Hayes (Bankr. E.D. Mo. 2026). · cites it 2× “11 U.S.C. § 1232 (a). The section derives from the former Section 1222(a)(2)(A), which Congress modified and relocated in a 2017 bill intended to overrule the Supreme Court’s interpretation of the statute in Hall v.”
United States v. Quesnel (D. Vt. 2025). “As such, any plan proposed by the Debtors shall provide for the payment of such obligations to the United States in full and shall, to the extent necessary to effect such payment in full, provide for a waiver of 11 U.S.C. § 1232 . Further, so as to ensure that the Debtors have…”
Lorenzo P Quesnel, Jr. & Amy Quesnel (Bankr. D. Vt. 2025). “As such, any plan proposed by the Debtors shall provide for the payment of such obligations to the United States in full and shall, to the extent necessary to effect such payment in full, provide for a waiver of 11 U.S.C. § 1232 . Further, so as to ensure that the Debtors have…”
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