I have some old sales tax liabilities dating back around ten years. If I file chapter 7 , can I discharge these in bankruptcy?
Family Law Attorney
No. State sales taxes that are owed are never dischargeable in bankruptcy. Some personal income taxes could be dischargeable, but you'd have to meet some very specific criteria to do it, and it's nearly impossible to achieve. But, sales taxes are not included - you'd owe it no matter what.
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7 lawyers agree
Divorce / Separation Lawyer
Depends if it is a corporation and what percentage you owned.
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It depends on whether or not the sales taxes are defined as a an "excise" or "trust fund" tax, which varies from state to state. In NYS, sales tax is considered a trust fund tax and is excepted from discharge in bankruptcy.
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5 lawyers agree
Generally speaking the answer is no - to the business that owes the tax. If this is related to tax the business collected but did not remit, then you probably want your bankruptcy attorney to force as much of your business assets towards this debt as possible. There is the real likelihood that this type of debt can become personal, or even criminal. If, however, this is sales tax that the state determined you should have collected but did not, then it will likely remain a business debt. As long as the business was a separate legal entity, then it likely will not become personal.
I hope this helps.
James Sutton, CPA, Esq.
Chapter 7 Bankruptcy Attorney
If these are NY sales taxes the answer is no. You can discharge the penalties that are associated with the tax. You can also pay the taxes through a Chapter 13 proceeding and depending on circumstances not incur anymore interest which is about 14% per year if paid outside bankruptcy. NY sales taxes now are collectible for 20 years from the date a NY warrant could have been filed and a lien on real property for 10 years from the date the warrant was filed at the county.