.jpg)
Discharging SBOE Taxes Assessed to Officers of Corpor=
Here is the Board of Equalization saying that a person who thinks he's going to get a responsible person assessment has some kind of duty to file a return claiming the personal liability for sales taxes:
http://www.boe.ca.gov/legal/pdf/McKoonH ... andler.pdf
________________________________
To: "cdcbaa@yahoogroups.com"
Sent: Friday, April 25, 2014 11:09 AM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
I agree that the return after the responsible party assessment is probably useless. I think it would be like filing an income tax return with the IRS after it assesses through the substitute for return procedure; we all know that such a return won't be treated as a return, and the debt can't be discharged.
It looks to me as if the only way to discharge sales tax to an individual is for the individual to file the return claiming the personal liability before the state makes its responsible party assessment.
But I stress again, I've never done this. Is there anyone out there who has actually discharged sales taxes owed by an individual? It would be really helpful to hear from that person.
- John D. Faucher
818/889-8080
________________________________
To: "cdcbaa@yahoogroups.com"
Sent: Friday, April 25, 2014 10:47 AM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
I'm not sure if or why a responsible officer would need to file a return after being assessed under California Revenue and Tax Code Section 6829.tion not already evident in the assessment.
I checked with an enrolled agent colleague just now and he hasn't ever heard of such a requirement.
Given that Ilko didn't address that issue, no other case law appears to address it either, and SBOE is very aggressive, it would be prudent to research further whetherthere is a requirement for filing a return under these circumstances.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Friday, April 25, 2014 10:10 AM, Stephen Mark wrote:
It seems the more I learn about this area the less I know. Based on the responses, if my client was personally assessed by the SBOE for sales taxes unpaid by the corporation, more than 240 days ago, but did not file a tax return claiming such tax liability, she is unable to file BK at this timeStephen M. Stern, Esq.
Law Office of Stephen M. Stern, PC
(805) 543-5297
On Friday, April 25, 2014 9:23 AM, Peter M. Lively wrote:
Jeff,
I recommend investing a reasonable amount in the Morgan Kingmaterials thatcover this issue.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 *
Fax: (310) 391-2462
On Thursday, April 24, 2014 7:57 PM, "jsmith@cgsattys.com" wrote:
I'm glad I posted. I know now to refer these cases out. I'm moreflusteredthan ever.
So, the PC who called last week with 10 year old SBOE salestaxes from a gas station he closed 10 years ago, who has moved to Indiana, and had the Cal SBOE drain his bank account last week, and who says the taxes were for a return that the company filed, but did not pay...what doI tell him? File an individual return for the liability that the company filed a return for 10 years ago and go underground for 2 years?
How about: "Call Peter Lively or Mark Markus orJohn Faucher?"I'm soooo confused.
GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
The responsibleofficer assessment following the entity's failure to pay. The entity could have filed the returns and been assessed based upon the returns, then failed to pay. I believe these are the facts of Ilko.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California
90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 3:41 PM, John Faucher wrote:
"In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged."
And how does an individual debtor get assessed for sales taxes incurred by his business? Either by having the taxing authority find him and make the assessment on his behalf, in which case there is no return filed (because the return filed by the business does not assess taxes against the individual), or he files his own return. If the taxing authority makes the assessment, no return, therefore no discharge.
- John D. Faucher
818/889-8080
The post was migrated from Yahoo.
I agree that the return after the responsible party assessment is probably useless. I think it would be like filing an income tax return with the IRS after it assesses through the substitute for return procedure; we all know that such a return won't be treated as a return, and the debt can't be discharged.
It looks to me as if the only way to discharge sales tax to an individual is for the individual to file the return claiming the personal liability before the state makes its responsible party assessment.
But I stress again, I've never done this. Is there anyone out there who has actually discharged sales taxes owed by an individual? It would be really helpful to hear from that person.
- John D. Faucher
818/889-8080
________________________________
To: "cdcbaa@yahoogroups.com"
Sent: Friday, April 25, 2014 10:47 AM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
I'm not sure if or why a responsible officer would need to file a return after being assessed under California Revenue and Tax Code Section 6829.tion not already evident in the assessment.
I checked with an enrolled agent colleague just now and he hasn't ever heard of such a requirement.
Given that Ilko didn't address that issue, no other case law appears to address it either, and SBOE is very aggressive, it would be prudent to research further whetherthere is a requirement for filing a return under these circumstances.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Friday, April 25, 2014 10:10 AM, Stephen Mark wrote:
It seems the more I learn about this area the less I know. Based on the responses, if my client was personally assessed by the SBOE for sales taxes unpaid by the corporation, more than 240 days ago, but did not file a tax return claiming such tax liability, she is unable to file BK at this timeStephen M. Stern, Esq.
Law Office of Stephen M. Stern, PC
(805) 543-5297
On Friday, April 25, 2014 9:23 AM, Peter M. Lively wrote:
Jeff,
I recommend investing a reasonable amount in the Morgan Kingmaterials thatcover this issue.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 *
Fax: (310) 391-2462
On Thursday, April 24, 2014 7:57 PM, "jsmith@cgsattys.com" wrote:
I'm glad I posted. I know now to refer these cases out. I'm moreflusteredthan ever.
So, the PC who called last week with 10 year old SBOE salestaxes from a gas station he closed 10 years ago, who has moved to Indiana, and had the Cal SBOE drain his bank account last week, and who says the taxes were for a return that the company filed, but did not pay...what doI tell him? File an individual return for the liability that the company filed a return for 10 years ago and go underground for 2 years?
How about: "Call Peter Lively or Mark Markus orJohn Faucher?"I'm soooo confused.
GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
The responsibleofficer assessment following the entity's failure to pay. The entity could have filed the returns and been assessed based upon the returns, then failed to pay. I believe these are the facts of Ilko.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California
90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 3:41 PM, John Faucher wrote:
"In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged."
And how does an individual debtor get assessed for sales taxes incurred by his business? Either by having the taxing authority find him and make the assessment on his behalf, in which case there is no return filed (because the return filed by the business does not assess taxes against the individual), or he files his own return. If the taxing authority makes the assessment, no return, therefore no discharge.
- John D. Faucher
818/889-8080
The post was migrated from Yahoo.
I'm not sure if or why a responsible officer would need to file a return after being assessed under California Revenue and Tax Code Section 6829.tion not already evident in the assessment.
I checked with an enrolled agent colleague just now and he hasn't ever heard of such a requirement.
Given that Ilko didn't address that issue, no other case law appears to address it either, and SBOE is very aggressive, it would be prudent to research further whetherthere is a requirement for filing a return under these circumstances.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Friday, April 25, 2014 10:10 AM, Stephen Mark wrote:
It seems the more I learn about this area the less I know. Based on the responses, if my client was personally assessed by the SBOE for sales taxes unpaid by the corporation, more than 240 days ago, but did not file a tax return claiming such tax liability, she is unable to file BK at this timeStephen M. Stern, Esq.
Law Office of Stephen M. Stern, PC
(805) 543-5297
On Friday, April 25, 2014 9:23 AM, Peter M. Lively wrote:
Jeff,
I recommend investing a reasonable amount in the Morgan Kingmaterials thatcover this issue.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 *
Fax: (310) 391-2462
On Thursday, April 24, 2014 7:57 PM, "jsmith@cgsattys.com" wrote:
I'm glad I posted. I know now to refer these cases out. I'm moreflusteredthan ever.
So, the PC who called last week with 10 year old SBOE salestaxes from a gas station he closed 10 years ago, who has moved to Indiana, and had the Cal SBOE drain his bank account last week, and who says the taxes were for a return that the company filed, but did not pay...what doI tell him? File an individual return for the liability that the company filed a return for 10 years ago and go underground for 2 years?
How about: "Call Peter Lively or Mark Markus orJohn Faucher?"
I'm soooo confused.
GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
The responsibleofficer assessment following the entity's failure to pay. The entity could have filed the returns and been assessed based upon the returns, then failed to pay. I believe these are the facts of Ilko.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California
90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 3:41 PM, John Faucher wrote:
"In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged."
And how does an individual debtor get assessed for sales taxes incurred by his business? Either by having the taxing authority find him and make the assessment on his behalf, in which case there is no return filed (because the return filed by the business does not assess taxes against the individual), or he files his own return. If the taxing authority makes the assessment, no return, therefore no discharge.
- John D. Faucher
818/889-8080
________________________________
To: "cdcbaa@yahoogroups.com"
Sent: Thursday, April 24, 2014 3:10 PM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
Shank dealt with Washingtonlaw where sales taxes are trust fund taxes, not excise taxes, therefore not dischargeable.
In CA, sales taxes or use taxes are taxes imposed on the retainer for the privilege of doing business, therefore an excise tax, and dischargeable under 507(a)(8)(E) if arising from a transaction over three years prior to the bankruptcy filing. CA requires sales tax returns (quarterly), so not dischargeable if the returns were not filed more than two years before the bankruptcy petition date. Because it is measured on gross receipts it is also subject to the 240 day assessment rule under 507(a)(8)(A).
In Ilko, the debtor
has not yet been assessed prior to the bankruptcy
petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 2:02 PM, "jsmith@..." wrote:
Group:
Can I get a little more input from everyone/someone on this thread? I might not agree (very respectfully) with Mark on this one, but I'm not sure.
I read In re Ilko, 651 F.3d 1049
(9th Cir. 2011). Its mind numbing. It cites as good lawShank v. State Dep't of Revenue (In re
Shank), 792 F.2d 829 (9th Cir.1986).
Shank says that sales taxes are "excise" taxes falling within two categories: those owed
personally by a retailer, thus falling within 507(a)(8)(E) (the excise tax provision) and those incurred by
a retailer's customers, which are collected by the retailer under the authority
of the state, held in trust, and then remitted by the retailer to the state,
falling within 507(a)(8)(C) (the trust fund tax provision). Ilko agrees that this is what Shank stands for.
If the sales tax is the former (i.e., "owed personally by a retailer") and therefore of the kind in 507(a)(8)(E), then I agree tht they are dischargeable if they are old enough or qualifyunder 507(a)(8)(E) (i) or (ii), perIlko.
ButI thinkShankisstillgood law as to liability for unremmitted retail sales taxes that were owed by the customers at the time of purchase and unremitted by the business to the government. That is that they are trust fund taxes and thus NEVER dischargeable? I hope I'm
wrong and missed a subsequent case here, but I find nothing on Westlaw.
My next question is, if I am right, can someone give me a paractical answer as to what the difference in the two "sales" taxes are? What exatly is a sales tax that is "owed personally by a retailer", as opposed to "those incurred by a retalier's customers which are collected by the retailer...held in trust..then remitted..". Is this like a tobacco or liquor tax? Isn't that something also being paid by the purchaser but collected by the retailer?
I am then further perplexed when Inote that in Ilko, the taxpayer: "was obligated to pay sales taxes to the State of California under Cal. Rev. & Tax Code 6051, which imposes a tax on all retailers [f]for the
privilege of selling tangible personal property at retail....".s, which makes Mark's reading of the case seem correct. TheIlko court found the taxes to be 507(a)(8)(E),excise taxes (but not dischargeable since they were still assessable on those facts), but NOT 507(a)(8)(C)trust fund taxes. I cannot for the life of me figure out the difference. Can anyone break it down for me?
I get questions about BOE sales taxesthis twice a year or soand contrary to Mark's post, I am in the habit of telling clients that sales taxes are just not dischargeable. I'd like to know that I have that wrong, but if so i'd like to know why. HELP?
And, GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California
As A Specialist
In Bankruptcy Law
The post was migrated from Yahoo.
Jeff,
I recommend investing a reasonable amount in the Morgan Kingmaterials thatcover this issue.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 7:57 PM, "jsmith@cgsattys.com" wrote:
I'm glad I posted. I know now to refer these cases out. I'm moreflusteredthan ever.
So, the PC who called last week with 10 year old SBOE salestaxes from a gas station he closed 10 years ago, who has moved to Indiana, and had the Cal SBOE drain his bank account last week, and who says the taxes were for a return that the company filed, but did not pay...what doI tell him? File an individual return for the liability that the company filed a return for 10 years ago and go underground for 2 years?
How about: "Call Peter Lively or Mark Markus orJohn Faucher?"I'm soooo confused.
GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
The responsibleofficer assessment following the entity's failure to pay. The entity could have filed the returns and been assessed based upon the returns, then failed to pay. I believe these are the facts of Ilko.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California
90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 3:41 PM, John Faucher wrote:
"In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged."
And how does an individual debtor get assessed for sales taxes incurred by his business? Either by having the taxing authority find him and make the assessment on his behalf, in which case there is no return filed (because the return filed by the business does not assess taxes against the individual), or he files his own return. If the taxing authority makes the assessment, no return, therefore no discharge.
- John D. Faucher
818/889-8080
________________________________
To: "cdcbaa@yahoogroups.com"
Sent: Thursday, April 24, 2014 3:10 PM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
Shank dealt with Washingtonlaw where sales taxes are trust fund taxes, not excise taxes, therefore not dischargeable.
In CA, sales taxes or use taxes are taxes imposed on the retainer for the privilege of doing business, therefore an excise tax, and dischargeable under 507(a)(8)(E) if arising from a transaction over three years prior to the bankruptcy filing. CA requires sales tax returns (quarterly), so not dischargeable if the returns were not filed more than two years before the bankruptcy petition date. Because it is measured on gross receipts it is also subject to the 240 day assessment rule under 507(a)(8)(A).
In Ilko, the debtor
has not yet been assessed prior to the bankruptcy
petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 2:02 PM, "jsmith@..." wrote:
Group:
Can I get a little more input from everyone/someone on this thread? I might not agree (very respectfully) with Mark on this one, but I'm not sure.
I read In re Ilko, 651 F.3d 1049
(9th Cir. 2011). Its mind numbing. It cites as good lawShank v. State Dep't of Revenue (In re
Shank), 792 F.2d 829 (9th Cir.1986).
Shank says that sales taxes are "excise" taxes falling within two categories: those owed
personally by a retailer, thus falling within 507(a)(8)(E) (the excise tax provision) and those incurred by
a retailer's customers, which are collected by the retailer under the authority
of the state, held in trust, and then remitted by the retailer to the state,
falling within 507(a)(8)(C) (the trust fund tax provision). Ilko agrees that this is what Shank stands for.
If the sales tax is the former (i.e., "owed personally by a retailer") and therefore of the kind in 507(a)(8)(E), then I agree tht they are dischargeable if they are old enough or qualifyunder 507(a)(8)(E) (i) or (ii), perIlko.
ButI thinkShankisstillgood law as to liability for unremmitted retail sales taxes that were owed by the customers at the time of purchase and unremitted by the business to the government. That is that they are trust fund taxes and thus NEVER dischargeable? I hope I'm
wrong and missed a subsequent case here, but I find nothing on Westlaw.
My next question is, if I am right, can someone give me a paractical answer as to what the difference in the two "sales" taxes are? What exatly is a sales tax that is "owed personally by a retailer", as opposed to "those incurred by a retalier's customers which are collected by the retailer...held in trust..then remitted..". Is this like a tobacco or liquor tax? Isn't that something also being paid by the purchaser but collected by the retailer?
I am then further perplexed when Inote that in Ilko, the taxpayer: "was obligated to pay sales taxes to the State of California under Cal. Rev. & Tax Code 6051, which imposes a tax on all retailers [f]for the
privilege of selling tangible personal property at retail....".s, which makes Mark's reading of the case seem correct. TheIlko court found the taxes to be 507(a)(8)(E),excise taxes (but not dischargeable since they were still assessable on those facts), but NOT 507(a)(8)(C)trust fund taxes. I cannot for the life of me figure out the difference. Can anyone break it down for me?
I get questions about BOE sales taxesthis twice a year or soand contrary to Mark's post, I am in the habit of telling clients that sales taxes are just not dischargeable. I'd like to know that I have that wrong, but if so i'd like to know why. HELP?
And, GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California
As A Specialist
In Bankruptcy Law
The post was migrated from Yahoo.
I have never actually trod on this ground, but this article by another local practitioner suggests that the responsible officer assessment isn't enough. The individual has to file a separate return self-assessing the sales taxes against himself to make the sales tax dischargeable.
- John D. Faucher
818/889-8080
The post was migrated from Yahoo.
The responsibleofficer assessment following the entity's failure to pay. The entity could have filed the returns and been assessed based upon the returns, then failed to pay. I believe these are the facts of Ilko.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 3:41 PM, John Faucher wrote:
"In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged."
And how does an individual debtor get assessed for sales taxes incurred by his business? Either by having the taxing authority find him and make the assessment on his behalf, in which case there is no return filed (because the return filed by the business does not assess taxes against the individual), or he files his own return. If the taxing authority makes the assessment, no return, therefore no discharge.
- John D. Faucher
818/889-8080
________________________________
To: "cdcbaa@yahoogroups.com"
Sent: Thursday, April 24, 2014 3:10 PM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
Shank dealt with Washingtonlaw where sales taxes are trust fund taxes, not excise taxes, therefore not dischargeable.
In CA, sales taxes or use taxes are taxes imposed on the retainer for the privilege of doing business, therefore an excise tax, and dischargeable under 507(a)(8)(E) if arising from a transaction over three years prior to the bankruptcy filing. CA requires sales tax returns (quarterly), so not dischargeable if the returns were not filed more than two years before the bankruptcy petition date. Because it is measured on gross receipts it is also subject to the 240 day assessment rule under 507(a)(8)(A).
In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged.
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Boulevard, Suite 203, Culver City, California 90230-4647
Telephone: (310) 391-2400* Toll Free: (800) 307-3328 * Fax: (310) 391-2462
On Thursday, April 24, 2014 2:02 PM, "jsmith@cgsattys.com" wrote:
Group:
Can I get a little more input from everyone/someone on this thread? I might not agree (very respectfully) with Mark on this one, but I'm not sure.
I read In re Ilko, 651 F.3d 1049
(9th Cir. 2011). Its mind numbing. It cites as good lawShank v. State Dep't of Revenue (In re
Shank), 792 F.2d 829 (9th Cir.1986).
Shank says that sales taxes are "excise" taxes falling within two categories: those owed
personally by a retailer, thus falling within 507(a)(8)(E) (the excise tax provision) and those incurred by
a retailer's customers, which are collected by the retailer under the authority
of the state, held in trust, and then remitted by the retailer to the state,
falling within 507(a)(8)(C) (the trust fund tax provision). Ilko agrees that this is what Shank stands for.
If the sales tax is the former (i.e., "owed personally by a retailer") and therefore of the kind in 507(a)(8)(E), then I agree tht they are dischargeable if they are old enough or qualifyunder 507(a)(8)(E) (i) or (ii), perIlko.
ButI thinkShankisstillgood law as to liability for unremmitted retail sales taxes that were owed by the customers at the time of purchase and unremitted by the business to the government. That is that they are trust fund taxes and thus NEVER dischargeable? I hope I'm wrong and missed a subsequent case here, but I find nothing on Westlaw.
My next question is, if I am right, can someone give me a paractical answer as to what the difference in the two "sales" taxes are? What exatly is a sales tax that is "owed personally by a retailer", as opposed to "those incurred by a retalier's customers which are collected by the retailer...held in trust..then remitted..". Is this like a tobacco or liquor tax? Isn't that something also being paid by the purchaser but collected by the retailer?
I am then further perplexed when Inote that in Ilko, the taxpayer: "was obligated to pay sales taxes to the State of California under Cal. Rev. & Tax Code 6051, which imposes a tax on all retailers [f]for the
privilege of selling tangible personal property at retail....".s, which makes Mark's reading of the case seem correct. TheIlko court found the taxes to be 507(a)(8)(E),excise taxes (but not dischargeable since they were still assessable on those facts), but NOT 507(a)(8)(C)trust fund taxes. I cannot for the life of me figure out the difference. Can anyone break it down for me?
I get questions about BOE sales taxesthis twice a year or soand contrary to Mark's post, I am in the habit of telling clients that sales taxes are just not dischargeable. I'd like to know that I have that wrong, but if so i'd like to know why. HELP?
And, GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
The post was migrated from Yahoo.
"In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged."
And how does an individual debtor get assessed for sales taxes incurred by his business? Either by having the taxing authority find him and make the assessment on his behalf, in which case there is no return filed (because the return filed by the business does not assess taxes against the individual), or he files his own return. If the taxing authority makes the assessment, no return, therefore no discharge.
- John D. Faucher
818/889-8080
________________________________
To: "cdcbaa@yahoogroups.com"
Sent: Thursday, April 24, 2014 3:10 PM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
Shank dealt with Washingtonlaw where sales taxes are trust fund taxes, not excise taxes, therefore not dischargeable.
In CA, sales taxes or use taxes are taxes imposed on the retainer for the privilege of doing business, therefore an excise tax, and dischargeable under 507(a)(8)(E) if arising from a transaction over three years prior to the bankruptcy filing. CA requires sales tax returns (quarterly), so not dischargeable if the returns were not filed more than two years before the bankruptcy petition date. Because it is measured on gross receipts it is also subject to the 240 day assessment rule under 507(a)(8)(A).
In Ilko, the debtor has not yet been assessed prior to the bankruptcy petition date, but was still subject to assessment so the CA sales taxes (excise not trust fund) was not discharged.
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On Thursday, April 24, 2014 2:02 PM, "jsmith@cgsattys.com" wrote:
Group:
Can I get a little more input from everyone/someone on this thread? I might not agree (very respectfully) with Mark on this one, but I'm not sure.
I read In re Ilko, 651 F.3d 1049
(9th Cir. 2011). Its mind numbing. It cites as good lawShank v. State Dep't of Revenue (In re
Shank), 792 F.2d 829 (9th Cir.1986).
Shank says that sales taxes are "excise" taxes falling within two categories: those owed
personally by a retailer, thus falling within 507(a)(8)(E) (the excise tax provision) and those incurred by
a retailer's customers, which are collected by the retailer under the authority
of the state, held in trust, and then remitted by the retailer to the state,
falling within 507(a)(8)(C) (the trust fund tax provision). Ilko agrees that this is what Shank stands for.
If the sales tax is the former (i.e., "owed personally by a retailer") and therefore of the kind in 507(a)(8)(E), then I agree tht they are dischargeable if they are old enough or qualifyunder 507(a)(8)(E) (i) or (ii), perIlko.
ButI thinkShankisstillgood law as to liability for unremmitted retail sales taxes that were owed by the customers at the time of purchase and unremitted by the business to the government. That is that they are trust fund taxes and thus NEVER dischargeable? I hope I'm wrong and missed a subsequent case here, but I find nothing on Westlaw.
My next question is, if I am right, can someone give me a paractical answer as to what the difference in the two "sales" taxes are? What exatly is a sales tax that is "owed personally by a retailer", as opposed to "those incurred by a retalier's customers which are collected by the retailer...held in trust..then remitted..". Is this like a tobacco or liquor tax? Isn't that something also being paid by the purchaser but collected by the retailer?
I am then further perplexed when Inote that in Ilko, the taxpayer: "was obligated to pay sales taxes to the State of California under Cal. Rev. & Tax Code 6051, which imposes a tax on all retailers [f]for the
privilege of selling tangible personal property at retail....".s, which makes Mark's reading of the case seem correct. TheIlko court found the taxes to be 507(a)(8)(E),excise taxes (but not dischargeable since they were still assessable on those facts), but NOT 507(a)(8)(C)trust fund taxes. I cannot for the life of me figure out the difference. Can anyone break it down for me?
I get questions about BOE sales taxesthis twice a year or soand contrary to Mark's post, I am in the habit of telling clients that sales taxes are just not dischargeable. I'd like to know that I have that wrong, but if so i'd like to know why. HELP?
And, GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
The post was migrated from Yahoo.
Hello Jeffrey:
I recall reading Ilko and trying to figure it out as well. I came to the conclusion that sales taxes are dischargeable, but only if the individual debtor planned on filing bankruptcy two years before doing so and actually filed a tax return with the Board of Equalization reporting his individual liability for the sales taxes, thus fulfilling the two-year return rule for excise taxes.
Because I suspect that no one ever in the history of California has filed a timely excise tax return reporting their individual sales tax liability, I believe that sales taxes are effectively nondischargeable here despite the fact that the state deems that sales taxes are not trust funds held for the benefit of the customer or the state.
- John D. Faucher
818/889-8080
________________________________
To: cdcbaa@yahoogroups.com
Sent: Thursday, April 24, 2014 2:02 PM
Subject: Re: [cdcbaa] Discharging SBOE Taxes Assessed to Officers of Corporation
Group:
Can I get a little more input from everyone/someone on this thread? I might not agree (very respectfully) with Mark on this one, but I'm not sure.
I read In re Ilko, 651 F.3d 1049
(9th Cir. 2011). Its mind numbing. It cites as good lawShank v. State Dep't of Revenue (In re
Shank), 792 F.2d 829 (9th Cir.1986).
Shank says that sales taxes are "excise" taxes falling within two categories: those owed
personally by a retailer, thus falling within 507(a)(8)(E) (the excise tax provision) and those incurred by
a retailer's customers, which are collected by the retailer under the authority
of the state, held in trust, and then remitted by the retailer to the state,
falling within 507(a)(8)(C) (the trust fund tax provision). Ilko agrees that this is what Shank stands for.
If the sales tax is the former (i.e., "owed personally by a retailer") and therefore of the kind in 507(a)(8)(E), then I agree tht they are dischargeable if they are old enough or qualifyunder 507(a)(8)(E) (i) or (ii), perIlko.
ButI thinkShankisstillgood law as to liability for unremmitted retail sales taxes that were owed by the customers at the time of purchase and unremitted by the business to the government. That is that they are trust fund taxes and thus NEVER dischargeable? I hope I'm wrong and missed a subsequent case here, but I find nothing on Westlaw.
My next question is, if I am right, can someone give me a paractical answer as to what the difference in the two "sales" taxes are? What exatly is a sales tax that is "owed personally by a retailer", as opposed to "those incurred by a retalier's customers which are collected by the retailer...held in trust..then remitted..". Is this like a tobacco or liquor tax? Isn't that something also being paid by the purchaser but collected by the retailer?
I am then further perplexed when Inote that in Ilko, the taxpayer: "was obligated to pay sales taxes to the State of California under Cal. Rev. & Tax Code 6051, which imposes a tax on all retailers [f]for the
privilege of selling tangible personal property at retail....".s, which makes Mark's reading of the case seem correct. TheIlko court found the taxes to be 507(a)(8)(E),excise taxes (but not dischargeable since they were still assessable on those facts), but NOT 507(a)(8)(C)trust fund taxes. I cannot for the life of me figure out the difference. Can anyone break it down for me?
I get questions about BOE sales taxesthis twice a year or soand contrary to Mark's post, I am in the habit of telling clients that sales taxes are just not dischargeable. I'd like to know that I have that wrong, but if so i'd like to know why. HELP?
And, GO KINGS GO!
-Jeffrey B. Smith**
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular
www.expertbk.com
**Certified By The State Bar
Of California As A Specialist
In Bankruptcy Law
The post was migrated from Yahoo.