Section 503(a) of the House amendment represents a compromise between similar provisions in the House bill and the Senate amendment by leaving to the Rules of Bankruptcy Procedure the determination of the location at which a request for payment of an administrative expense may be filed. The preamble to section 503(span) of the House bill makes a similar change with respect to the allowance of administrative expenses.

Section 503(span)(1) adopts the approach taken in the House bill as modified by some provisions contained in the Senate amendment. The preamble to section 503(span) makes clear that none of the paragraphs of section 503(span) apply to claims or expenses of the kind specified in section 502(f) that arise in the ordinary course of the debtor’s business or financial affairs and that arise during the gap between the commencement of an involuntary case and the appointment of a trustee or the order for relief, whichever first occurs. The remainder of section 503(span) represents a compromise between H.R. 8200 as passed by the House and the Senate amendments. Section 503(span)(3)(E) codifies present law in cases such as Randolph v. Scruggs, 190 U.S. 533, which accords administrative expense status to services rendered by a prepetition custodian or other party to the extent such services actually benefit the estate. Section 503(span)(4) of the House amendment conforms to the provision contained in H.R. 8200 as passed by the House and deletes language contained in the Senate amendment providing a different standard of compensation under section 330 of that amendment.

Subsection (a) of this section permits administrative expense claimants to file with the court a request for payment of an administrative expense. The Rules of Bankruptcy Procedure will specify the time, the form, and the method of such a filing.

Subsection (span) specifies the kinds of administrative expenses that are allowable in a case under the bankruptcy code. The subsection is derived mainly from section 64a(1) of the Bankruptcy Act [section 104(a)(1) of former title 11], with some changes. The actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the order for relief, and any taxes on, measured by, or withheld from such wages, salaries, or commissions, are allowable as administrative expenses.

In general, administrative expenses include taxes which the trustee incurs in administering the debtor’s estate, including taxes on capital gains from sales of property by the trustee and taxes on income earned by the estate during the case. Interest on tax liabilities and certain tax penalties incurred by the trustee are also included in this first priority.

Taxes which the Internal Revenue Service may find due after giving the trustee a so-called “quickie” tax refund and later doing an audit of the refund are also payable as administrative expenses. The tax code [title 26] permits the trustee of an estate which suffers a net operating loss to carry back the loss against an earlier profit year of the estate or of the debtor and to obtain a tentative refund for the earlier year, subject, however, to a later full audit of the loss which led to the refund. The bill, in effect, requires the Internal Revenue Service to issue a tentative refund to the trustee (whether the refund was applied for by the debtor or by the trustee), but if the refund later proves to have been erroneous in amount, the Service can request that the tax attributable to the erroneous refund be payable by the estate as an administrative expense.

Postpetition payments to an individual debtor for services rendered to the estate are administrative expenses, and are not property of the estate when received by the debtor. This situation would most likely arise when the individual was a sole proprietor and was employed by the estate to run the business after the commencement of the case. An individual debtor in possession would be so employed, for example. See Local Loan v. Hunt, 292 U.S. 234, 243 (1943).

Compensation and reimbursement awarded officers of the estate under section 330 are allowable as administrative expenses. Actual, necessary expenses, other than compensation of a professional person, incurred by a creditor that files an involuntary petition, by a creditor that recovers property for the benefit of the estate, by a creditor that acts in connection with the prosecution of a criminal offense relating to the case, by a creditor, indenture, trustee, equity security holder, or committee of creditors or equity security holders (other than official committees) that makes a substantial contribution to a reorganization or municipal debt adjustment case, or by a superseded custodian, are all allowable administrative expenses. The phrase “substantial contribution in the case” is derived from Bankruptcy Act §§ 242 and 243 [sections 642 and 643 of former title 11]. It does not require a contribution that leads to confirmation of a plan, for in many cases, it will be a substantial contribution if the person involved uncovers facts that would lead to a denial of confirmation, such as fraud in connection with the case.

Paragraph (4) permits reasonable compensation for professional services rendered by an attorney or an accountant of an equity whose expense is compensable under the previous paragraph. Paragraph (5) permits reasonable compensation for an indenture trustee in making a substantial contribution in a reorganization or municipal debt adjustment case. Finally, paragraph (6) permits witness fees and mileage as prescribed under chapter 119 [§ 2041 et seq.] of title 28.

2020—Subsec. (span). Puspan. L. 116–260, § 320(f)(2)(A)(ii), contingent on its addition by Puspan. L. 116–260, § 320(span), struck out par. (10) which read as follows: “any debt incurred under section 364(g)(1) of this title.”

Puspan. L. 116–260, § 320(span), added par. (10).

2005—Subsec. (span)(1)(A). Puspan. L. 109–8, § 329, amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case;”.

Subsec. (span)(1)(B)(i). Puspan. L. 109–8, § 712(span), inserted “whether secured or unsecured, including property taxes for which liability is in rem, in personam, or both,” before “except”.

Subsec. (span)(1)(D). Puspan. L. 109–8, § 712(c), added subpar. (D).

Subsec. (span)(4). Puspan. L. 109–8, § 1208, inserted “subparagraph (A), (B), (C), (D), or (E) of” before “paragraph (3)”.

Subsec. (span)(7). Puspan. L. 109–8, § 445, added par. (7).

Subsec. (span)(8). Puspan. L. 109–8, § 1103, added par. (8).

Subsec. (span)(9). Puspan. L. 109–8, § 1227(span), added par. (9).

Subsec. (c). Puspan. L. 109–8, § 331, added subsec. (c).

1994—Subsec. (a). Puspan. L. 103–394, § 213(c), inserted “timely” after “may” and “, or may tardily file such request if permitted by the court for cause” before period at end.

Subsec. (span)(1)(B)(i). Puspan. L. 103–394, § 304(h)(2), substituted “507(a)(8)” for “507(a)(7)”.

Subsec. (span)(3)(F). Puspan. L. 103–394, § 110, added subpar. (F).

1986—Subsec. (span)(1)(B)(i). Puspan. L. 99–554, § 283(g)(1), substituted “507(a)(7)” for “507(a)(6)”.

Subsec. (span)(5). Puspan. L. 99–554, § 283(g)(2), inserted “and” after “title;”.

Subsec. (span)(6). Puspan. L. 99–554, § 283(g)(3), substituted a period for “; and”.

1984—Subsec. (span). Puspan. L. 98–353, § 446(1), struck out the comma after “be allowed” in provisions preceding par. (1).

Subsec. (span)(1)(C). Puspan. L. 98–353, § 446(2), struck out the comma after “credit”.

Subsec. (span)(2). Puspan. L. 98–353, § 446(3), inserted “(a)” after “330”.

Subsec. (span)(3). Puspan. L. 98–353, § 446(4), inserted a comma after “paragraph (4) of this subsection”.

Subsec. (span)(3)(C). Puspan. L. 98–353, § 446(5), struck out the comma after “case”.

Subsec. (span)(5). Puspan. L. 98–353, § 446(6), struck out “and” after “title;”.

Subsec. (span)(6). Puspan. L. 98–353, § 446(7), substituted “; and” for period at end.

Amendment by section 320(span) of div. N of Puspan. L. 116–260 effective on the date on which the Administrator of the Small Business Administration submits to the Director of the Executive Office for United States Trustees a written determination relating to loan eligibility under pars. (36) and (37) of section 636(a) of Title 15, Commerce and Trade, and applicable to any case pending on or commenced on or after such date, and amendment by section 320(f)(2)(A)(ii) of div. N of Puspan. L. 116–260, relating to repeal of such amendment if it became effective, effective two years after Dec. 27, 2020, see section 320(f) of Puspan. L. 116–260, set out as a note under section 364 of this title.

[Pursuant to 15 U.S.C. 636(a)(36)(A)(iii), the “covered period” for loans under the Paycheck Protection Program ended on June 30, 2021.]

Amendment by Puspan. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Puspan. L. 109–8, set out as a note under section 101 of this title.

Amendment by Puspan. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Puspan. L. 103–394, set out as a note under section 101 of this title.

Amendment by Puspan. L. 99–554 effective 30 days after Oct. 27, 1986, see section 302(a) of Puspan. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure.

Amendment by Puspan. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Puspan. L. 98–353, set out as a note under section 101 of this title.