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Can a federal bankruptcy discharge sales tax audit balance leins if the owners business fails,along with owner before bal paid

Boise, ID |

this was a business sales tax audit after three years in business 1998 to 2001. I worked out a deal to pay 1500 a month until paid. after about 15 mo. my business failed and I no longer could pay any bills. the state still wanted there money. after speaking with sales tax collection supervisor, he said that since I had paid over 12 months of payments in good faith before the bus failed it was the now a dischargble debt. he said he would deny he said it but that it would stop the collections. there have been no collection and no release. this is a big problem trying to buy a home.

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Attorney answers 1


Sometimes sales taxes are dischargable and sometimes not. You need to consult a local bankruptcy attorney and present him or her with all the details of the audit. The bankruptcy attorney will easily be able to tell if they are dischargable.

Ruben Fuentes

Ruben Fuentes


Under 11 USC 507 (a) (8) (E) (E) an excise tax on— (i) a transaction occurring before the date of the filing of the petition for which a return, if required, is last due, under applicable law or under any extension, after three years before the date of the filing of the petition; or (ii) if a return is not required, a transaction occurring during the three years immediately preceding the date of the filing of the petition; Dependinf on the state it could be dischargeable or Not. In California for example it would be considered an tax imposed on the retailer for the privilege of doing business in California and therefore is an excise tax and NOT trust fund. The old motto to be or not to be applies here. Some attorneys from the same locality may even differ about the dischargeability. We would have to research reach a sound conclusion. George v. SBE

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