United States v. Juvenile Shoe Corp. of America

HEANEY, Circuit Judge.

This appeal presents the question of whether a fifteen percent flat tax levied on funds reverted to an employer from an over-funded employee pension plan constitutes an excise tax or a nonpecuniary-loss penalty for purposes of establishing priority in a bank*900ruptcy proceeding. The bankruptcy court held that the tax levied pursuant to 26 U.S.C. § 4980 (1988) constitutes a nonpecuniary-loss penalty. The district court reversed and we now affirm.

I

In 1989, Juvenile Shoe Corporation (“Juvenile Shoe”) separated its employee pension plan into two separate plans: one for retired…