OPINION
After this Chapter 11 case converted to an “administratively insolvent” Chapter 7 ease, the United States of America moved for an accounting, disgorgement of fees paid to professionals, and immediate payment of its administrative expense claim. On summary judgment, the bankruptcy court denied the motion, finding that the government could not prove an entitlement to' disgorgement because its penalty claim, under IRC § 4971, for the Debtor’s failure to adequately fund employee benefit plans, either did not qualify as an administrative expense under 11 U.S.C. § 503(b), or qualified in an amount too small to warrant disgorgement. In a second decision, the bankruptcy court held that 11 U.S.C. § 726(b) did not automatically require only professionals to disgorge interim compensation when a bankruptcy estate became “administratively insolvent.” Exercising its discretion, the bankruptcy court considered administrative insolvency as a factor in its decision to disallow a significant portion of the final fee request from the Debtor’s bankruptcy counsel. We affirm.
I. ISSUES ON APPEAL
1) Whether penalties under IRC § 4971 are administrative expenses under 11 U.S.C. § 503(b); and
II. JURISDICTION AND STANDARD OF REVIEW
The United States District Court for the Northern District of Ohio authorized appeals to the Bankruptcy Appellate Panel of the Sixth Circuit. 28 U.S.C. § 158(b)(6). No party opted out of review of this appeal by the BAP.
For purposes of appeal, an order is final if it “ ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ”
National City Bank v. Elliott (In re Elliott),
A bankruptcy court’s grant of summary judgment is reviewed de novo.
See, e.g., Corzin v. Fordu (In re Fordu),
Whether to order professionals to disgorge interim compensation is a matter within the sound discretion of the bankruptcy court.
Michel v. Federated Dep’t Stores, Inc. (In re Federated Dep’t Stores, Inc.),
III. FACTS
Unitcast, Inc. filed Chapter 11 on May 3, 1993, and operated as á debtor in possession until Bruce Comly French was appointed trustee on June 1, 1995. No plan was confirmed. The case converted to Chapter 7 on July 17, 1995, and Mr. French continued as Chapter 7 trustee. The Chapter 7 estate is “administratively insolvent” — there are insufficient funds, after payment of Chapter 7 administrative expenses, to satisfy all unpaid administrative expenses from the Chapter 11 period.
During the Chapter 11 ease the Debtor and the Official Committee of Unsecured Creditors, with court approval, retained several professionals under 11 U.S.C. §§ 327 and 1103. Appellees Schottenstein, Zox & Dunn, William Eachus, Richard Olt, Bugbee & Conkle, Midwest Environmental Consultants, Inc., and Findley Davies
&
Co., were, respectively, the Debtor’s bankruptcy counsel, business and financial, consultant, business and financial operations assistant, spe
During the Chapter 11 administrative period, Appellees each received interim compensation pursuant to 11 U.S.C. §§ 381 and 330. These payments ranged from 64% to 100% of the amount requested.
The United States asserts an administrative claim of $1,985,665.12, plus statutory additions. The bulk of this claim, $1,806,004.10, is for penalties pursuant to IRC § 4971(a) and (b), and relates to accumulated funding deficiencies in the Debtor’s employee benefit plans under IRC § 412 and 29 U.S.C. § 1082. 1 For plan years ending June 30, 1991, June 30, 1992, and June 30, 1993, the Debtor’s accumulated funding deficiencies were $719,755,. $1,074,964, and $1,618,320. The remainder of the government’s claim, $179,661.03, is postpetition payroll taxes.
During the Chapter 11 administrative period, the government received $2,281,476.28 in payroll taxes from the Debtor. A portion, approximately $260,925, was paid pursuant to an Agreed Order that permitted the Debtor to cure its third quarter 1993 payroll tax liability with monthly payments. The Debtor and the government disagree whether the Debtor satisfied the Agreed Order.
After conversion to Chapter 7, the United States filed a Motion for Accounting, Disgorgement, and Payment of the United States’ Post-Petition Tax Claims. The motion sought an accounting of ¿11 property of the estate, all claims against the estate, all disbursements made from the estate, and immediate payment in full of the government’s asserted administrative claim. The motion further sought disgorgement from all professionals of all payments of interim compensation during the Chapter 11 case, or, in the alternative, of amounts calculated under the formula described in
Shaia v. Durrette, Irvin, Lemons & Bradshaw, P.C. (In re Met
ropolitan
Electric Supply Corp.),
.On cross motions for summary judgment, the bankruptcy court held that the government’s administrative claim did not justify disgorgement.
In re Unitcast, Inc.,
On July 1, 1997, the bankruptcy court issued a second decision. In re
Unitcast, Inc.,
IV. DISCUSSION
A. Penalties Under IRC § 4971 Qualify as Administrative Expenses Only to the Extent Related to a Tax of a Kind Specified in § 503(b)(1)(B).
Section 503(b) provides:
After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under section 502(f) of this title, including—
(1)(A) the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the ease;
(B) any tax—
(i) incurred by the estate, except a tax of a kind specified in section 507(a)(7) of this title; or
(ii) attributable to an excessive allowance of a tentative carryback adjustment that the estate received, whether the taxable year to which such adjustment relates ended before or after the commencement of the case; and
(C) any fine, penalty, or reduction in credit relating to a tax of a kind specified in subparagraph (B) of this paragraph ____
11 U.S.C. § 503(b) (1994). 2 Administrative expenses are entitled to first priority among unsecured and priority claims. 11 U.S.C. § 507(a)(1).
The Sixth Circuit has embraced “the well-accepted ‘benefit to the estate’ test, which states that a debt qualifies as an ‘actual, necessary’ administrative expense only if (1) it arose from a transaction with the bankruptcy estate and (2) directly and substantially benefitted the estate. The benefit to the estate test limits administrative claims to those where the consideration for the claim was received during the post-petition period.”
PBGC v. Sunarhauserman, Inc. (In re Sunarhauserman, Inc.),
1. Postpetition Liabilities.
“[I]t is an absolute requirement for administrative expense priority that the liability- at issue arise post-petition.”
Sunarhauserman,
Section 1082 of ERISA prescribes “minimum funding standards” for employers, which “require[ ] every employer maintaining a tax-qualified plan to fund the plan until it is terminated, in amounts determined by the plan’s enrolled actuary in accordance with ERISA and the Internal Revenue Code.” Id. at 815 (citing IRC §§ 404 & 412; 29 U.S.C. § 1082). Minimum funding liability accrues over the plan year, although paid in quarterly installments. 29 U.S.C. § 1082(e); IRC § 412(m). Any amount that remains due for a plan year must be contributed no later than 8}£ months after the close of the plan year. IRC § 412(c)(10); 29 U.S.C. § 1082(c)(10). An “accumulated funding deficiency” is the amount by which total charges to a plan’s “funding standard account” for all plan years exceeds the total credits to that account for all plan years. IRC §§ 4971(c)(1) & 412(a)(2); 29 U.S.C. § 1082(a)(2).
Section 4971 of the Internal Revenue Code imposes a two tier penalty 3 on an employer’s failure to meet “minimum funding standards:”
(a) Initial tax. — For each taxable year of an employer who maintains a plan to which sectioi) 412 [of .the IRC] applies, there is hereby imposed a tax of 10 percent ... on the amount of the accumulated funding deficiency under the plan, determined as of the end of the plan year ending with or within such taxable year.
(b) Additional tax. — In any case in which an initial tax is imposed by subsection (a) on an accumulated funding deficiency and such accumulated funding deficiency is not corrected within the taxable period* there is hereby imposed a tax equal to 100 percent of such accumulated funding deficiency to the extent not corrected.
IRC § 4971. Under § 4971(a), a 10% penalty is exacted if an employer fails to cure a deficiency within the statutory grace period. The additional 100% penalty in § 4971(b) is imposed if the initial 10% penalty is not paid within the “taxable period.” 4
The Sixth Circuit determined in
Sunar-hauserman
that a debtor’s minimum funding obligations under IRC § 412 and 29 Ú.S.'C. § 1082 are administrative expense claims only to the extent “the Debtors’ post-petition funding obligation ... can be tied to employees’ actual post-petition services — i.e., hours actually worked by employees post-filing.”
Sunarhauserman,
The Pension Benefit Guaranty Corporation (“PBGC”) filed an administrative expense claim for $338,143 for unpaid “postpetition” minimum funding contributions. The debtors objected. The bankruptcy court held “that the ‘non-normal cost’ component of [PBGC’s] claim was not entitled to administrative expense priority because it was based on an experience loss that was realized pre-petition. ... [T]he ‘normal cost’ component of [PBGC’s] .administrative expense claim [wras adjusted] to reflect the post-petition decrease in the Debtors’ workforce and freeze of benefit accruals.’” Id. at 814. 5 The bankruptcy court allowed only $67,612 of the PBGC’s claim as an administrative expense. The district court affirmed. .
On appeal, the PBGC urged and the Sixth Circuit rejected essentially the same arguments the IRS makes here. First, the Sixth Circuit rejected the PBGC’s contention that the bankruptcy and district courts “improperly applied the ‘benefit to the estate’ test, which required that a claim be based on consideration after the bankruptcy petition [was] filed in order to be entitled to administrative expense priority.” Id. The Sixth Circuit held that most of the PBGC’s claim arose before the petition because the pension plan’s actuarial accrued liability, or nonnor-mal costs, related to a prepetition liability— benefits earned by employees before the bankruptcy filing. Id. at 819-21.
The Sixth Circuit then rejected the PBGC’s assertion that it was “improper ][to] limit[ ]■ administrative expense priority to that portion of its post-petition minimum funding cqntribution claim attributable to pension benefits actually earned by employee/participants employed by the debtors [postpetition].”
Id.
at 819. The Sixth Circuit reminded the PBGC that ERISA limitations on “allocation” of mini
The Sixth Circuit concluded that the bankruptcy court properly adjusted the debtors’ liability to reflect postpetition reductions in workforce and the freezing of benefits. Id. at 820-21. Only those portions of the debtors’ postpetition funding obligation tied to employees’ postpetition services could be “actual and necessary” expenses of administration under § 503(b). Id.
Sunarhauserman is binding precedent and we discern no reason to treat the § 4971 penalty assessed for failure to cure" a minimum funding deficiency better than, or different from, the deficiency itself. As in Sunarhauserman, the acts that gave rise to this debtor’s § 4971 liability were in large part the prepetition labors of the Debtor’s employees. The Debtor’s § 4971 liability can be characterized as “postpetition” only to the extent Sunarhauserman would allocate the penalties to postpetition labor by Debtor’s employees.
2. Postpetition § 4971 Penalties as Administrative Expenses.
The postpetition portion of the government’s § 4971 penalty claim will be an allowed administrative expense only to the extent it otherwise qualifies under § 503(b). The government acknowledges that § 4971 penalties are not a tax within § 503(b)(1)(B), but asserts the penalties achieve administrative priority under § 503(b) generally, or under § 503(b)(1)(C).
a. “Including” Is Not All Encompassing.
Section 503(b) describes types of claims that can be administrative expenses; its examples aré not exhaustive.
See In re Mary James, Inc.,
The government argues that use of the term “including” twice in § 503(b) creates an ambiguity. Citing
United States v. Flo-Lizer, Inc. (In re Flo-Lizer, Inc.),
In Flo-Lizer, the Sixth Circuit held that interest on a tax liability “incurred by the estate” is entitled to administrative expense priority notwithstanding the absence of a specific reference to interest in § 503(b). Id. at 366. The double use of “including” in § 503(b) was acknowledged in Flo-Lizer, and the Sixth Circuit resolved any ambiguity by considering the treatment of interest on priority tax claims under the Bankruptcy Act and the legislative history of § 503(b). Id. at 365-66.
Under the Bankruptcy Act, interest on administrative priority taxes had long been entitled to the same priority as the tax.
Id.; see Nicholas v. United States,
The inclusion of penalties on postpetition taxes in section 503(b) indicates that Congress was willing to have the bankruptcyestate pay for expenses that arise out of the failure of a debtor in possession or the trustee to pay taxes in a timely manner. There is no reason why Congress would give a lesser priority to interest than to penalties.
Flo-Lizer,
Flo-Lizer
does not expand to embrace § 4971 penalties. The extensive treatment of tax related penalties in the Bankruptcy Code is fundamentally different from the Code’s silence with respect to interest on taxes incurred by an estate. Certain tax related penalties are expressly afforded administrative expense priority under § 503(b)(1)(C). Other tax related penalties are categorically relegated to seventh priority under (former) § 507(a)(7)(G). Any claim for a tax described in § 507(a)(7).is excluded from administrative priority under § 503(b)(1)(B). Any penalty that is not compensation for actual pecuniary loss and that arose before the earlier of the order for relief or the appointment of a trustee is subordinated in Chapter 7 cases pursuant to § 726(a)(4). Specific treatment of penalties throughout the priority and distribution sections of the Bankruptcy Code demonstrates Congressional intent to exclude from § 503(b) status penalties that are not enumerated.
See Raleigh & Gaston Ry. Co. v. Reid,
80 U.S. (13 Wall) 269, 270,
The Bankruptcy Code’s express treatment of penalties on taxes incurred by the estate is a codification of pre-Code law. Under the Bankruptcy Act,’ § 57j disallowed debts owing to the United States as a penalty or forfeiture, “except of the amount of the pecuniary loss sustained by the act, transaction, or proceeding out of which the penalty or forfeiture arose,...-.” 11 U.S.C. § 93j (repealed 1979). In
Boteler v. Ingels,
Any receiver, liquidator, referee, trustee, or other officers or agents appointed by any United States court who is authorized by said court to conduct any business, or who does conduct any business, shall, ..., be subject to all State and local taxes applicable to such business the same as if such business were conducted by an individual or corporation....
Boteler,
The Court revisited
Boteler
in
Nicholas v. United States,
In § 503(b)(1)(C), Congress codified the results in
Nicholas
and
Boteler.
In
Nicholas,
the penalty related to a tax that was, in the parlance of the Bankruptcy Code, “incurred by the estate.”
See Varsity Carpet
The legislative history to § 503(b) indicates that Congress considered the priority of postpetition tax related, penalties, and determined that some but not all would be allowed as administrative expenses. See S.Rep. No. 95-989, 95th Cong., 2d Sess. 66 (1978) (accompanying S2266). Congress balanced the interests of governments, innocent unsecured creditors who suffer the allowance of priority penalties and the interests of the marketplace in maintaining a level field of play. The government has offered no compelling reason for the Panel to interfere with that balance.
b. Penalties Allowed Under § 503(b)(1)(C) Must Relate to a Tax of a Kind Specified in § 503(b)(1)(B).
The government argues grammar for the proposition that § 4971 penalties are entitled to administrative priority under § 503(b)(1)(C), even if unrelated to a tax specified in § 503(b)(1)(B). • The government contends that the absence of a comma between “reduction in credit” and “relating to a tax ...” dictates that the antecedent phrase “relating to a tax of a kind specified in subparagraph (B) of this paragraph” limits only a “reduction in credit,” and not “any fine, .penalty.”
The government cites no supporting case authority or legislative history for this parsing of § 503(b), nor has the Panel’s research produced any. The case law uniformly recites or assumes that to be allowed under § 503(b)(1)(C), any fine, any penalty and any reduction in credit, must relate to a tax allowed under § 503(b)(1)(B).
See, e.g., In re Mort Hall Acquisition, Inc.,
The government offers the elusive “doctrine of the last antecedent” to bolster its construction. Section 503(b)(1)(C) reads, “there shall be allowed administrative expenses, ..., including, ..., any fine, penalty, or reduction in credit relating to a tax of a kind specified in subparagraph (B) of this paragraph.” 11 U.S.C. § 503(b)(1)(C). “Under [the doctrine of the last antecedent], qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding, and are not to be construed as extending to and including others more remote.”
Elliot Coal Mining Co. v. Director, Office of Workers’ Compensation Programs,
Application of this “doctrine” to isolate the relationship test of § 503(b)(1)(C) from fines and penalties is not required grammar and makes a mess of other words .and punctuation in the section.
See Nobelman v. American Savs. Bank,
[M]any leading grammarians, while sometimes noting that commas at the end of a series can avoid ambiguity, concede that use of such commas is discretionary. When grammarians are divided, and surely where they are cheerfully tolerant, we will not attach significance to an omitted comma. It is enough to say that the statute’spunctuation is fully consistent with the respondent’s interpretation, and that in this case grammatical expertise will not help to clarify the statute’s meaning.
Id.
at 340 n. 6,
The use of a comma before the conjunction “or” in § 503(b)(1)(C) is not consistent with the government’s reading of the section. The first two nouns of § 503(b)(1)(C), “any fine” and “penalty,” are separated by commas as well as separated from “reduction in credit” by a comma before the conjunction “or.” In Elliot Coal Mining, the Third Circuit addressed the use of a comma before the coordinate conjunction “or,” and explained:
Under the normal rules of English punctuation for words in a series, it is the absence of a comma or other punctuation before the coordinate conjunction “or” that would indicate it and its modifier, the limiting adjective clause, are to be treated separately rather than as part of the whole series. See The Gregg Reference Manual at 35 (7th ed.1993); see also 1A Sutherland Statutory Construction § 21.15. Conversely, the presence of a comma before the last clause in the statute suggests that the limiting clause applies to the entire series.
This use of a comma to set off a modifying phrase from other clauses indicates that the qualifying language is to be applied to all of the previous phrases and not merely the immediately preceding phrase. Cf. National Sur. Corp. v. Midland Bank,551 F.2d 21 , 34 (3d Cir.1977) (lack of a comma limited application of the qualifying language to the word immediately preceding it).
Elliot Coal Mining Co.,
Section 503(b)’s punctuation accurately reflects the balanced treatment of tax penalties intended by Congress. If we were to read “relating to a tax of a kind specified in subparagraph (B) of this paragraph” to modify only “reduction in credit,” all fines and all penalties would become eligible for administrative priority. That result is not consistent with the Bankruptcy Code’s detailed treatment of penalties or the narrow construction given priorities under the Code. If Congress intended the limiting phrase to extend only to “reductions in credit” it would simply have omitted the comma before “or,” or it would have written “fines and penalties or reductions in credit relating to a tax____” The bankruptcy court correctly concluded that the limiting clause in § 503(b)(1)(C) applies to fines and penalties and reductions in credit.
c. Section 4971 Penalties Do Not Relate to a Tax Allowable Under § 503(b)(1)(C).
Circularly, the United States contends, “[w]hen an excise tax claim under 26 U.S.C. § 4971 is treated as a claim for penalties under the Bankruptcy Code, the claim by definition still relates to a ‘tax’ claim for purposes of Section 503(b)(1)(C).” In other words, the § 4971 exaction serves as both the penalty and the tax to which it relates under § 503(b)(1)(B). This argument makes nonsense of the phrase “relating to a tax” and ignores altogether that “taxes” and “penalties ... relating to a tax” have separate identities and differing treatments throughout the Bankruptcy Code.
Falling back, the government scours the IRC for a tax to which § 4971 penalties might relate. Candidates include: the Debt- or’s postpetition income taxes; employment taxes on postpetition wages paid by the Debtor; and, the Debtor’s liability under IRC § 412(n) which is characterized as a “tax.”
“Relating to” is not defined by the Bankruptcy Code. Black’s Law Dictionary defines “relate” as “to stand in some relation; to have bearing or concern; to pertain; refer; to bring into association with or connection with____” Black’s Law Dictionary 1288 (6th ed.1990). 7 This definition confirms the ordinary use of the word — a nexus, link or connection.
Section 4971 penalties lack sufficient connection, pertinence or bearing upon income taxes and employment taxes to satisfy the “relating to” test. There is no direct or indirect cause and effect relationship be
Section 412 of the Internal Revenue Code does not provide the missing link, but for different reasons. Section 412 defines minimum funding standards for qualified pension plans; it does not impose a “tax” for bankruptcy purposes. In
CF & I Fabricators,
the Supreme Court reaffirmed “the interpretive principle that characterizations in the Internal Revenue Code are not dispositive in the bankruptcy context____”
CF & I Fabricators,
Section 412 relates to ERISA qualified employee benefit plans which must meet the requirements of IRC § 401(a). The precato-ry language of § 401(a) mandates that any qualified pension plan be “for the exclusive benefit of ... employees or their beneficiaries.” IRC § 401(a). Section 412 provides support to and protects employees who participate in benefit plans; it does not support a governmental unit and it is not a “tax” for bankruptcy purposes.
B. Disgorgement of Professional Fees.
1. Section 726 Does Not Mandate Disgorgement from Professionals upon Administrative Insolvency.
Section 726 of the Bankruptcy Code fixes the order of distribution of assets in Chapter 7 cases. Estate property is distributed “first, in payment of claims of the kinds specified in, and in the order specified in, section 507 of the [Bankruptcy Code.]” 11 U.S.C- § 726(b). Section 507(a)(1) confers first priority on administrative expenses allowed under § 503(b).
Section 726(b) addresses distribution of assets when an estate is.“administratively insolvent,” and after conversion from a rehabilitative Chapter to Chapter 7:
Payment on claims of a kind specified in paragraph (1), (2), (3), (4), (5), (6) or (7) of section 507(a) of this title, or in paragraph .(2), (3), (4), or (5) of subsection (a) of this section, shall be made pro rata among claims of the kind specified in each such particular paragraph, except that in a case that has been converted to this Chapter under section 1112, 1208, or 1307 of this title, a claim allowed under section 503(b) of this title incurred under this Chapter after such conversion has priority over a claim allowed under section 503(b) of this title incurred under any other Chapter of this title or under this Chapter before such conversion and over any expenses of a custodian superseded under section 543 of this title.
11 U.S.C. § 726(b).
That a bankruptcy judge has authority to order disgorgement of interim compensation when an estate turns out to be administratively insolvent is not here disputed.
See, e.g., Matz v. Hoseman,
The government urges a line of authority that it reads to
require
disgorgement of in
Another line of cases finds no mandatory disgorgement and redistribution of professional compensation in § 726(b), but acknowledges that the bankruptcy court has discretion to order disgorgement as part of the statutory management of professional fees and expenses under 11 U.S.C. §§ 330 and 331.
See In re Anolik,
whether the party facing disgorgement had a reasonable expectation that the payment received was final, ... whether any party who would suffer from nondisgorgement has objected to the trustee’s proposed final distribution!,] ... [and whether] a professional ha[d] reason to believe that its goal [was] unachievable but nevertheless continue[d] to unreasonably amass fees....
Where disgorgement by any party is ordered, such disgorgement should not exceed the amount that would be required to achieve a pro rata distribution assuming that all parties subject to disgorgement were ordered to relinquish funds, regardless of whether the court actually so ordered.
Id. at 39-40 (citations and footnotes omitted).
We agree with the bankruptcy court that § 726(b) does not compel disgorgement from professionals in every case of administrative insolvency. Instead, disgorgement is a remedy within the discretion of bankruptcy judges as the final arbiters of professional fee requests under §§ 330 and 331 of the Code. Administrative insolvency is one factor appropriately considered in the exercise of that discretion.
Section 726(b) contemplates “pro rata” distribution based on the requests for payment of administrative expenses allowable at the time of distribution. Nothing in § 726(b), in its predecessors under prior law, or in the legislative history of the Code compels trustees of administratively insolvent estates to reach back through the prior administrative period(s) to recover (only) payments to professionals, that disgorgement then transforms into (unpayable) “administrative expenses.”
The rationale urged by the government effects a categorically subordinated priority for professionals in all cases of administrative insolvency, in disregard of the priority scheme crafted by Congress. In
United States v. Noland,
2. The Bankruptcy Court Did Not Abuse Its Discretion.
We will not disturb a bankruptcy court’s exercise of discretion unless the judge applied the wrong legal standard, misapplied the correct legal standard, relied on clearly erroneous factual findings, or the Panel is left with the firm conviction that a mistake has beén made.
Fordu,
While there is no bright line or litmus test that directs when disgorgement is appropriate, this record reveals no abuse of discretion by the bankruptcy court. Other than administrative insolvency, the only evidence offered by the government in support of disgorgement and redistribution was the Debtor’s alleged failure to comply with an Agreed Order that permitted monthly payments to cure a postpetition payroll tax delinquency. By argument only, the government assigns responsibility to all the Professionals for the Debtor’s failure to fully perform the Agreed Order. The role-played by the Creditors’ Committee’s counsel, by the workers’ compensation expert or by the environmental consultant in the Debtor’s failure to remit payroll taxes is not explained by the government. The bankruptcy court refused fully 25% of Debtor’s counsel’s final request for fees and expenses based in part on the estate’s administrative insolvency. When pressed at oral argument, counsel for the government could not direct this Panel to any evidence of bad faith or misconduct by any professional. The bankruptcy court’s rejection of disgorgement in this case did not constitute an abuse of discretion.
V. CONCLUSION
The decisions of. the bankruptcy court are AFFIRMED.
Notes
. These are parallel provisions of the Internal Revenue Code and the Employee Retirement Income Security Act.
. Section 507(a)(7) was renumbered as § 507(a)(8) by the Bankruptcy Reform Act of 1994. This case was filed prior to the effective date of the 1994 Act.
. In
United States v. Reorganized CF & I Fabricators of Utah, Inc.,
. The "taxable period" is "the period beginning the end of the plan year in which there is an accumulated funding deficiency and ending on the earlier of (A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a), or (B) the date on which the tax imposed by subsection (a) is assessed." IRC § 4971(c)(3).
. "A pension plan’s 'normal cost' is the annual cost of future pension benefits and administrative expenses assigned, under an actuarial cost method, to years subsequent to a particular valuation date of a pension plan. 29 U.S.C. § 1002(28). A pension plan’s ... 'non-normal cost,’ refers simply to that portion of a plan's annual cost that is not 'normal cost[,]' [s]ee 29 U.S.C. §. 1002(29)[,] ... [including] seven statutory charges that may affect a pension plan’s funding standard account, depending on which cost method the plan uses.” Sunarhauserman, 126 F.3d..at 8-16 (citing 29 U.S.C. § .1082(b)(2); IRC § 412(b)(2)).
. The successor to 28 U.S.C. § 124a is codified at 28 U.S.C. § 960:
Any officers and agents conducting any business under authority of a United States court shall be subject to all Federal, State and local taxes applicable to such business to the same extent as if it were conducted by an individual or corporation.
28 U.S.C. § 960.
.
See National City Bank v. Plechaty (In re Plechaty),