OPINION
ROBERT G. MOOREMAN, Bankruptcy Judge:This appeal arises from an order by the bankruptcy court designating the allocation of payments by the debtor to the U.S. on behalf of the Internal Revenue Service (“IRS”), in order to partially satisfy outstanding tax liabilities. The IRS challenges the order on the contention that payments made while in bankruptcy require court action and approval, resulting in the payments being construed as involuntary payments. IRS policies have adopted common law principles which provide for a distinction between voluntary and involuntary payments. A taxpayer making a voluntary payment to the IRS has the right to designate the allocation of those funds to reduce any liability outstanding, while an involuntary payment may be allocated by the IRS in regard to its policies and procedures. See Muntwyler v. United States, 703 F.2d 1030, 1032 (7th Cir.1983); O’Dell v. United States, 326 F.2d 451, 456 (10th Cir.1964).
Notwithstanding the existence of authority to the contrary, this Court will affirm the order of the bankruptcy court and its allocation of the amounts paid.
ISSUE PRESENTED
Did the bankruptcy court err by designating the allocation of a payment to the IRS?
FACTS
The debtor in the instant case filed for bankruptcy protection under Chapter 11 on May 3, 1984. The operation of the entity has been continued by the debtor in possession. On August 16, 1984, the IRS filed a proof of claim for pre-petition taxes in the amount of $491,634.19. The majority of this amount owing consisted of unpaid employment taxes regarding wages of the debtor’s employees.
In September, 1985, the debtor filed a motion before the bankruptcy court, requesting that it be allowed to make payments to the IRS as well as direct the allocation of those payments. After a hearing on this matter, the bankruptcy court granted the motion. Appellant filed a timely notice of appeal.
STANDARD OF REVIEW
In reviewing decisions by the bankruptcy court, this Court will overturn findings of fact only upon a showing that they are clearly erroneous, see Bankruptcy Rule 8013, while conclusions of law will be reviewed de novo. In re American Mariner Industries, Inc., 734 F.2d 426, 429 (9th Cir.1984); In re Ellsworth, 722 F.2d 1448 (9th Cir.1984). There is no dispute concerning the facts herein; accordingly, our review is de novo.
DISCUSSION
The IRS contends that the bankruptcy court erred in allowing the debtor to designate the allocation of its payments on pre-petition tax obligations. It argues that the *465payments made in bankruptcy proceedings are involuntary, thereby precluding the debtor from designating the allocation of the funds.
In the present case, the tax liability which exists arose from the non-payment of taxes which were to have been withheld from employees’ wages. As set forth in 26 U.S.C. Section 3402(a), each employer is required to deduct and withhold a portion of those wages on behalf of the employee. Further, pursuant to Section 7501, those amounts withheld by the employer “shall be held to be a special fund in trust for the United States.” Muntwyler v. United States, 703 F.2d 1030, 1032 (7th Cir.1983).
Liability for these “trust funds” is imposed first upon the employer, pursuant to Sections 3102(a) and 3403. In addition to this liability to pay over the withheld “trust funds” to the IRS, the Tax Code also provides for a penalty for noncompliance with the provisions. Failure to provide these “trust funds” to the IRS can result in a penalty, imposed as a personal liability upon the person required to withhold such funds, in an amount equal to that amount not collected by the IRS, see 26 U.S.C. Section 6672, known as the “100-percent penalty.” The personal liability of the employer and the “100-percent penalty” are to help ensure payment of the taxes withheld from employees’ wages.
In the present case, the bulk of the taxes owing to the IRS are “trust funds.” By designating the allocation of payments to the IRS, the debtor company is able to reduce the personal liability of the corporate member responsible for maintaining the “trust funds.” Conversely, the IRS desires to allocate the payments to non-trust fund liabilities, leaving in place the personal liability of the corporate member, as well as the “100-percent penalty.”
Under the relevant IRS policy statement, the ability to allocate the distribution of payments to the IRS depends upon the characterization of the payment as either voluntary or involuntary. As mentioned above, this dichotomy arose from common law principles regarding the payment of debts. In re Frost, 47 B.R. 961, 964 (D.Kan.1985); See also Muntwyler v. United States, 703 F.2d 1030, 1032 (7th Cir.1983); O’Dell v. United States, 326 F.2d 451, 456 (10th Cir.1964). The tax code contains no provisions regarding the allocation of voluntary payments.
Conversely, if the payment is involuntary, the IRS retains the right to allocate the funds among the existing liabilities. Muntwyler, supra; IRS Policy Statement P-5-60, reprinted in CCH Internal Revenue Manual at 1305-15. While the IRS policy statements deal with involuntary payments, there is no tax code provision regarding this subject.
The determination of voluntary versus involuntary is not an easy one, as many courts have struggled to find a specific definition of these terms. See e.g. Muntwyler, supra; In re Hineline, 57 B.R. 248 (Bankr.Ohio 1986); In re A & B Heating & Air Conditioning, Inc., 53 B.R. 54 (Bankr.Fla.1985). In Amos v. Commissioner, 47 T.C. 65 (1966), the court set forth the following definition:
An involuntary payment of Federal taxes means any payment received by agents of the United States as a result of distraint or levy of from a legal proceeding in which the Government is seeking to collect its delinquent taxes or file a claim therefor.
In Muntwyler, the court found that a payment did not become involuntary “whenever an agency takes even the slightest action to collect taxes, such as filing a claim_” Id., at 1033. The court looked to the policy statements of the IRS in regard to a provision in the tax code, 26 U.S.C. Section 6672, which provide as follows: “The taxpayer, of course, has no right of designation in the case of collections resulting from enforced collection measures.” Based upon this policy statement, the court found that merely filing a claim did not amount to “enforced collection measures” sufficient to construe the payments as involuntary.
*466Difficulty arises, however, when viewing transactions which occur in bankruptcy proceedings. While the reorganization includes legal proceedings, the actions of the debtor, at least in a Chapter 11 matter, are mainly voluntary. Several courts have addressed this problem and have reached different results.
The court in In re Hartley Plumbing Company, Inc., 32 B.R. 8 (Bankr.Ala.1983), was faced with a situation similar to that presented herein, where the payments were voluntarily made by the debtor. The court found that due to the fact that the debtor could convert the case from a Chapter 7 to a Chapter 11 as a matter of right and could dismiss it if there was no showing of prejudice, the payments made to the IRS were voluntary, thereby entitling the debtor the right to designate the allocation of the payments.
Further, where the bankruptcy court has approved a Chapter 11 plan which included such payments to the IRS, at least three courts have found the payments to be voluntary. See In re Lifescape, Inc., 54 B.R. 526 (Bankr.Colo.1985); In re A & B Heating & Air Conditioning, 53 B.R. 54, 13 BCD 571 (Bankr.Fla.1985); and In re Franklin Press, Inc., 52 B.R. 151 (Bankr.Fla.1985); Contra, In re Frost, 47 B.R. 961 (D.Kan.1985); Avildsen v. United States, 40 B.R. 253 (N.D.Ill.1984), aff'd on other grounds, 974 F.2d 1248 (7th Cir.1986)1.
Although the discussion concerning the characterization of the payments may be controlling in certain circumstances, it does not directly address the concern present in a bankruptcy matter such as the case at bar. The issue presented herein is not whether the debtor may, on its own, allocate the funds to be paid to the IRS. Instead, this Court must determine whether the bankruptcy court acted within its power in making such an allocation, as the transfer took place pursuant to court order.
Pursuant to Section 505 of the Bankruptcy Code (11 U.S.C.), the bankruptcy court must determine the amount of tax and penalties, if any, owing from the debtor and/or bankruptcy estate. Included in this determination is the allocation of funds paid to the IRS to satisfy the various outstanding tax liabilities which may exist. “Where, as here, moneys are repaid under judicial order, the court has the exclusive authority to apply the funds.” First National City Bank v. Kline, 439 F.Supp. 726, 729 (S.D.N.Y.1977) (as cited in Muntwyler, supra, at 1033.) In the present case, there is no dispute that the bankruptcy court ordered the contested allocation, albeit at the debtor’s request.
Accordingly, the issue before this Court is whether the bankruptcy court abused its discretion in allocating the payment to reduce the “trust fund” portion of the tax liability. There is no evidence in the record before this Court to support a conclusion that the bankruptcy court’s ruling should be disturbed. While the voluntary-involuntary dichotomy can be utilized in determining the proper allocation of the payment, it is not controlling upon the bankruptcy court’s decision. A holding to the contrary would allow IRS policy statements to limit the exercise of the bankruptcy court’s equitable jurisdiction, a result inconsistent with the history and intent of bankruptcy legislation. See e.g. Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281 (1939).
On the record before it and after a full hearing on the dispute, the bankruptcy court in the present case determined that an equitable allocation would result from directing all of the payment to reduce the “trust fund” portion of the tax liability. Such a determination was clearly within its *467authority pursuant to 11 U.S.C. Section 505. See also First National City Bank v. Kline, supra. Absent evidence which indicates that the court abused its power in making the determination, this Court will not disturb such a decision. Accordingly, the order of the bankruptcy court is hereby AFFIRMED.
. Although the district court in Avildsen held that payments made during the course of the bankruptcy proceedings were involuntary, the Seventh Circuit did not reach this issue. See Id., at p. 1252. The Court of Appeals limited their holding to the fact that the debtor and the IRS had entered into a settlement agreement for all outstanding liabilities, which the debtor subsequently failed to meet. Based upon this breach of the agreement, the Court found that the IRS was entitled to ignore the limited endorsement on the payment received from the debtor, thereby allowing the IRS to allocate the payment pursuant to its policies and regulations.