THE PRIORITIES OF FEDERAL TAXES OVER STATE AND LOCAL TAXES--REVISITED: ABSTRACT

State and local tax liens, if fixed and enforceable, prevail generally over liens for subsequently assessed federal taxes. In bankruptcy, unsecured claims for federal, state and local taxes stand generally on a parity, and outrank federal nontax claims. Yet in insolvent decedents' estates, assignments for creditors, bankruptcy reorganizations, and similar insolvencies, federal tax and nontax claims must be paid before state and local taxes, including most which are secured by liens perfected under local law. Pending legislation (S.2197) would bring the prioritres in such insolvencies into line with those established by the Federal Tax Lien Act and the Bankruptcy Act.