Bankruptcy Taxation

By:  Katelyn Trionfetti
St. John’s Law Student
American Bankruptcy Institute Law Review Staff

In Texas Comptroller of Public Accounts v. Liuzza (In re Texas Pig Stands, Inc.),[1] the Fifth Circuit considered whether a bankruptcy trustee could be held personally liable for failing to remit state sales tax pursuant to Texas Tax Code section 111.016(b).[2] In Texas Pig Stands, the state taxing authority brought an adversary proceeding against a bankruptcy trustee after the trustee failed to timely remit state sales tax, which violated a court order and a court approved reorganization plan.[3] The Fifth Circuit held that the trustee was personally liable for over $100,000[4] in taxes he failed to remit.[5]

By: Katarina Galic
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
 

When do state income taxes become “payable” to taxing authorities for purposes of chapter 13 bankruptcy? This was the precise question the Ninth Circuit recently answered in Joye v. Franchise Tax Bd. (In re Joye).[1] Disagreeing with the Fifth Circuit, the Ninth Circuit Court of Appeals adopted a liberal view and held that taxes become due when they are “capable of being paid.”[2]