Are Sales Taxes and Property Taxes Dischargeable in Bankruptcy?
A sales tax is a tax collected from a customer by a seller of goods or services. Sales taxes are classified as trust fund taxes in Texas because the business is required to collect the tax from the customer in the capacity of a trustee for the state.
Personal Liability for Sales Taxes as Trust Fund Taxes in TexasAn individual is personally liable for non-payment of a sales tax is he (1) controls or supervises the collection of the tax from a customer; or (2) supervises the accounting and payment of the tax to the state and willfully fails to pay the funds to the state. Any owner or employee of a business who either collects or supervises the collection of the tax, or who is responsible to pay the bills and willfully fails to pay the state will be personally liable for payment of the tax if it is not paid.
Property Taxes are Dischargeable - SometimesA property tax is a tax imposed upon a person by virtue of his ownership of property. Real estate taxes levied upon land owners by local municipalities and personal property taxes levied against business owners by local municipalities for ownership of personal property used in connection with a business are the two types of property taxes in Texas. Property taxes are dischargeable if the tax was incurred before the commencement of the case and was last payable without penalty more than one year before the bankruptcy petition was filed. Remember, however, that liens survive bankruptcy. Property taxes are secured with a statutory lien against the property that the tax is assessed against. Therefore, if you want to keep the property that the property tax was assessed against, you must pay the property taxes even if the debt is discharged in bankruptcy or the taxing authority can foreclose on the property.