Sales Tax Debt Not Dischargable

During a recent bankruptcy case heard by the Third Circuit Court of Appeals, a decision was made regarding sales tax collected by businesses. The court ruled the same as three other federal appellate courts but approached their ruling differently. It was acknowledged that “while the Bankruptcy Code was intended to provide debtors with a fresh start and to place creditors on an equal footing, treating sales taxes collected from customers as a dischargeable debt would create perverse incentives for those operating a failing business.” The Third Circuit found that sales taxes collected from customers should be treated as trust fund taxes under the Bankruptcy Code and shall not be discharged. Read Full Article.

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.