Discharging SBOE Taxes Assessed to Officers of Corporation
Posted: Thu May 01, 2014 9:49 am
That appearsto be at odds with the cases holdingCA sales taxes are use taxes measured on gross income.
Perhaps way back then when you and Jim were starting out, the law was different.
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, May 1, 2014 6:55 AM, cdcbaa wrote:
California.
Dennis McGoldrick, 350 S. Crenshaw Bl., #A207B, Torrance, Ca 90503 310-328-1001-voice
On Apr 28, 2014, at 10:12 AM, "Peter M. Lively" wrote:
>Dennis,
>
>
>Which state was your client collecting sales tax for?
>
>
>Peter
>
>Peter M. Lively, J.D., M.B.A.
>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 4:43 PM, cdcbaa wrote:
>
>
>Jeff:
>
>
>What is worse is, it is a crime to collect sales taxes and not turn them over to the state. I had a client get 5 years for this crime. So, they are not just nondischargeable, they are criminal. I have always considered unpaid sales taxes like the third rail.
>
>
>Dennis
>
>Dennis McGoldrick, 350 S. Crenshaw Bl., #A207B, Torrance, Ca 90503 310-328-1001-voice
>
>On Apr 24, 2014, at 7:57 PM, 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
>>
>>
>>---In cdcbaa@yahoogroups.com, wrote :
>>
>>
>>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.
>>
>>Peter M. Lively, J.D., M.B.A.
>>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.
>>
>>
>>
>>Peter M. Lively, J.D., M.B.A.
>>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.