United States of America (Internal Revenue Service), Creditor-Appellant v. Louis George Barbier, Ruth Dean Barbier, Debtors-Appellees

In this Chapter 13 bankruptcy proceeding, the Internal Revenue Service, as a lien creditor, appeals the district court’s affirmance of the bankruptcy court’s determination that the IRS lien was unsecured. 84 B.R. 190 .

I

In 1985, the Internal Revenue Service (“IRS”) assessed federal income tax deficiencies against Louis George Barbier and Ruth Dean Barbier (“the Barbiers”) for tax years 1980, 1981, 1982, and 1983. On April 1, 1986, the IRS recorded a notice of federal tax lien based on assessments totalling over $62,000. On August 15, 1986, the Barbiers filed a joint petition under Chapter 13 of the Bankruptcy Code, 11 U.S.C. §§ 1321-1325 . Their plan classified the IRS’s assessment of federal income tax deficiencies against them as an unsecured priority claim and classified interest and assessable penalties due as a general unsecured claim. The IRS filed an amended proof of claim reclassifying these claims as secured and objected to the Barbiers’ plan.

In the bankruptcy proceedings, the Bar-biers argued that 26 U.S.C. § 6334 , which exempts from an administrative levy household effects and a limited amount of other property, also prohibits the attachment of a federal tax lien…