TREATMENT OF CERTAIN LIENS.

SEC. 701. TREATMENT OF CERTAIN LIENS.(a) Treatment of Certain Liens.—Section 724 of title 11, United States Code, is amended—(1) in subsection (b), in the matter preceding paragraph (1), by inserting “(other than to the extent that there is a properly perfected unavoidable tax lien arising in connection with an ad valorem tax on real or personal property of the estate)” after “under this title”;(2) in subsection (b)(2), by inserting “(except that such expenses, other than claims for wages, salaries, or commissions that arise after the date of the filing of the petition, shall be limited to expenses incurred under chapter 7 of this title and shall not include expenses incurred under chapter 11 of this title)” after “507(a)(1)”; and(3) by adding at the end the following:“(e) Before subordinating a tax lien on real or personal property of the estate, the trustee shall—“(1) exhaust the unencumbered assets of the estate; and“(2) in a manner consistent with section 506(c), recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving or disposing of such property.“(f) Notwithstanding the exclusion of ad valorem tax liens under this section and subject to the requirements of subsection (e), the following may be paid from property of the estate which secures a tax lien, or the proceeds of such property:“(1) Claims for wages, salaries, and commissions that are entitled to priority under section 507(a)(4). “(2) Claims for contributions to an employee benefit plan entitled to priority under section 507(a)(5).”.(b) Determination of Tax Liability.—Section 505(a)(2) of title 11, United States Code, is amended—(1) in subparagraph (A), by striking “or” at the end;(2) in subparagraph (B), by striking the period at the end and inserting “; or”; and(3) by adding at the end the following:“(C) the amount or legality of any amount arising in connection with an ad valorem tax on real or personal property of the estate, if the applicable period for contesting or redetermining that amount under any law (other than a bankruptcy law) has expired.”.119 STAT. 125