Yes. California sales taxes are not trust funds. Therefore, they can potentially be discharged (forgiven, wiped out) in a Chapter 7 bankruptcy.
What happens to a business when they declare bankruptcy?
Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to “liquidate” (sell) the company’s assets and the money is used to pay off the debt, which may include debts to creditors and investors. The owners are last in line to be repaid if the company fails.
What debts are you still liable for after bankruptcy?
While a bankruptcy discharge wipes out your personal liability for discharged debts, a lien on property you owned when you filed bankruptcy continues to be liable for the debt. So you aren’t liable but your property can be seized to pay the debt.
Are there state sales taxes dischargeable in bankrupt?
In NYS, sales tax is considered a trust fund tax and is excepted from discharge in bankruptcy. This material does not constitute tax, legal or accounting advice. It was not intended or written…
Can you discharge Social Security taxes in bankruptcy?
Employment taxes are never dischargeable in bankruptcy because the employer is obligated to withhold these taxes and hold them in trust for the benefit of the employee’s social security and unemployment insurance.
What kind of taxes do I have to pay when I file bankruptcy?
* Taxes “on or measured by income or gross receipts” as defined in detail by statute. * Unsecured property taxes assessed prior to the bankruptcy but last payable without penalty less than one year prior to the filing of the petition.
Can a sales tax be discharged from a trust fund?
Sales Tax. The issue of discharging sales taxes are a complicated one and mainly depend of whether your state treats these taxes as a “trust fund tax” or “excise tax”.
