Written by attorney Frederick E. Walker

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.

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In some states, like California, sales taxes are not trust fund taxes because they are not collected by the merchant from the purchaser but are instead a direct tax owed by the seller. These types of sales taxes may be dischargeable under the same type of rules governing discharge of income taxes.

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