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Hello Shannon Heres how to navigate this.
507(a)(8)(C ) makes any any tax required to be . . . withheld a priority
tax. 523(a)(1)(A) makes all priority taxes non-dischargeable. Thats it.
523(a)(1)(B) also makes late-filed and non-filed taxes non-dischargeable;
this is a reason for non-dischargeability which is separate from the
priority tax reason. Note that the subparagraphs of 523(a)(1) are
disjunctive; meet the terms of any single subparagraph, and youve got a
non-dischargeable tax.
- John Faucher
On 5/14/10 7:22 AM, "Shannon Doyle" wrote:
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> Thank you John. I believe the taxes are not dischargeable; however I am still
> thrown off by 523(a)(1), which says taxes of this nature (under 507(a)(8) the
> employee withholdings) are not dischargeable as to returns that are not filed,
> or filed late and within 2 years of filing, or fraudulent. That seems to say
> if the return was filed timely with no fraud the tax is dischargeable. Is the
> fact that taxes were not withheld considered fraud? Actually in my case the
> taxes were withheld but went to other expenses of the business so this could
> the piece of the analysis I am missing that renders them dischargeable
>
>
> Shannon A. Doyle, Esq.
> Borowitz & Clark, LLP
> 100 N. Barranca Ave., Ste. 250
> West Covina, CA 91791-1600
> (626) 646-2555 Phone
> (626) 332-8644 Fax
>
sdoyle@blclaw.com
>
>
John
> Faucher
> Sent: Thursday, May 13, 2010 10:17 PM
> To:
cdcbaa@yahoogroups.com
> Subject: Re: [cdcbaa] Corp withholdings taxes
>
>
>
> Youre correct, its not that easy. Half of the Form 941 tax liability for
> the corporation is the corporations contribution to the employees social
> security payments, and half is the employees contribution which has been
> withheld from his paycheck. That half thats been withheld is held by the
> corporation in trust, and is referred to as the trust fund taxes. Any
> individual who is responsible for paying those taxes (owner, president, CFO,
> secretary with check-signing authority) has a personal non-dischargeable
> liability see 507(a)(8), whichever subsection refers to taxes withheld on
> behalf of another. You can never discharge them; the only way to get rid of
> them is through offer-in-compromise or long years of payment.
>
> In 10 years experience at IRS, I saw that these taxes are the most strictly
> enforced; revenue officers see failure to pay these taxes as morally
> equivalent to grand theft, and will treat debtors as not-yet-convicted
> criminals. Most corporations which get behind on these taxes get shut down by
> the IRS; arguments that we need the business to stay open so the IRS can
> collect more fall on deaf ears, because the ROs see themselves as law
> enforcement rather than collection officers here.
>
> - John D. Faucher
>
>
> On 5/13/10 6:31 PM, "Shannon Doyle" wrote:
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>> Client owns Corp. Corp owes 05 employee withholdings tax which it is paying.
>> However, my question is with respect to debtors personal liability in Ch7.
>> In reading 523(a)(1) in conjunction with 507(a)(8)(C), it appears the taxes
>> would be dischargeable if a timely return was filed and there was no fraud.
>> It cant be that easy. Can someone enlighten me as to what I am missing here?
>>
>>
>> Shannon A. Doyle, Esq.
>>
>> Borowitz & Clark, LLP
>>
>> 100 N. Barranca Avenue, Suite 250
>>
>> West Covina, CA 91791-1600
>>
>> (626) 646-2555 Phone
>>
>> (626) 332-8644 Facsimile
>>
>>
www.blclaw.com
>>
>>
>
>
>
>
>>> - John D. Faucher
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Re: [cdcbaa] Corp withholdings taxes
Hello Shannon – Here’s how to navigate this.
The post was migrated from Yahoo.