Central District Consumer Bankruptcy Attorney's Association

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That was really helpful, Raj.
So, bottom-lining it, are there any business-related debts an business
(employer?) can owe to the state of California that are non-dischargeable no
matter what? And are sales taxes the only business debt to the state
subject to the income tax rules?
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You should read Tax News & Views in the California Bankruptcy Journal where all is revealed.
Elmer Dean Martin III
P. O. Box 4670
Diamond Bar, CA 91765
909 861 6700
elmer@bankruptcytax.net

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I dont believe thats accurate. California sales taxes are subject to the same rules as income taxes b/c California is an excise tax rather than a trust fund tax state.
The dischargeability of sales taxes depend on state law (whether a sales tax is assessed either on the purchaser, or on the seller). Where the tax is assessed on the purchaser at the retail end a duty is imposed on the retailer to collect the tax and pay it over to the taxing entity. As such, the tax is a "trust fund tax" and is non-dischargeable under 507(a)(8)(C). For example, the sales tax imposed under Washington state law is assessed against the purchaser, and is therefore a trust fund tax that the retailer may not discharge in bankruptcy.
However, a tax imposed not on the purchaser but rather on the retailer is an excise tax assessed on the retailer for the privilege of doing business in the state. California's sales tax is imposed on the retailer for the privilege of doing business in California and therefore is an excise tax, not a trust fund tax.
Raj T. Wadhwani
Wadhwani Law Firm, APLC
15233 Ventura Blvd., Suite 1120
Sherman Oaks, CA 91403
Phone: (818) 784-0500
Fax: (818) 784-0508
raj@wadhwanilaw.com
________________________________

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I think Raj is probably correct. Ive never seen a situation where the
sales taxes were dischargeable, and thats probably because in California
theyre not.
Good idea about Abe though. Would probably drum up a decent amount of
business for him anyway.

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okay, I have had several INCONSISTENT answers, including one which I forgot
that I wrote about 3 years ago. We should really get Abe to come down and
clear this up for all of us. If Nancy (the curr program chair) asks me to
do so, I will call Abe and see if I can arrange it.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Mark JM
Sent: Friday, January 30, 2009 3:51 PM
To: cdcbaa@yahoogroups.com
Subject: RE: [cdcbaa] Sales Tax
In most cases, no. It depends on whether or not they are trust fund taxes
that are required to be held for and paid over to the State, and apparently
some sales taxes may not be (I forget under what circumstances).
Also, remember Abe Golomb who specializes in State
Board of Equalization matters. His web address is www.Salestaxreducti
on.com. His
phone number is 888-982-9776.
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
Toll Free: 1-866-576-6275
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this means at

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I had forgotten about Abe. We should get his butt down here to do a
program............
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Sent: Friday, January 30, 2009 4:06 PM
To: cdcbaa@yahoogroups.com; David A. Tilem
Subject: RE: [cdcbaa] Sales Tax
CA Sales taxes are subject to the same dischargeability rules as income
taxes. Some states treat sales taxes as withholding taxes and thereby
non-disch. CA does not.
Raj T. Wadhwani
Wadhwani Law Firm, APLC
15233 Ventura Blvd., Suite 1120
Sherman Oaks, CA 91403
Phone: (818) 784-0500
Fax: (818) 784-0508
raj@wadhwanilaw.com
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The last time I had one of these cases, the CA sales tax was an
"excise" tax and not a trust fund tax. It's a state by state
analysis. It follows the same rules as income tax (3 year rule, 2
year rule, 240 day rule, etc). Morgan King's "Discharging Taxes in
Bankruptcy" is the reference.
Gerald McNally
McNally & Associates, P.C.
206 N. Jackson St. #100
Glendale, CA 91206
818.507.5100
The last time I had one of these cases, the CA sales tax was

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CA Sales taxes are subject to the same dischargeability rules as income taxes. Some states treat sales taxes as withholding taxes and thereby non-disch. CA does not.
Raj T. Wadhwani
Wadhwani Law Firm, APLC
15233 Ventura Blvd., Suite 1120
Sherman Oaks, CA 91403
Phone: (818) 784-0500
Fax: (818) 784-0508
raj@wadhwanilaw.com
________________________________

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In most cases, no. It depends on whether or not they are trust fund taxes
that are required to be held for and paid over to the State, and apparently
some sales taxes may not be (I forget under what circumstances).
Also, remember Abe Golomb who specializes in State
Board of Equalization matters. His web address is www.Salestaxreduction.com.
His
phone number is 888-982-9776.
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
Toll Free: 1-866-576-6275
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this means at

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I know that we revisit this issue from time to time, but I can't remember
the answer.
Are sales taxes dischargeable?
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
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Message
I know that we revisit this
issue from time to time, but I can't remember the answer.
Are sales taxes
dischargeable?

David A.
Tilem
Certified Bankruptcy
Specialist*
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