Unemployment Tax Adversary Proceeding against Responsible Person

[Hansioli]

I filed a Chapter 7 personal bankruptcy at the beginning of last year which was discharged in the spring of last year. Before the discharge was finalized the California EDD filed an adversary proceeding against me for unemployment insurance taxes which were due from a company I was an executive officer of. The EDD is arguing that these taxes were "Trust Fund" taxes witheld from the employees paychecks under 507(a)(8)(C) of the bankruptcy code and as a responsible person for the company I am liable for the taxes and they are not dischargeable.

Unemployments Insurance Taxes are paid by the employer and not the employee and are not "trust fund" taxes. My understanding is that the taxes should be considered under 507(a)(8)(D) of the bankruptcy code and would be dischargeable if they are older than three years and the returns were filed timely. The tax year in questions is more than three years old.

Does anyone know of any case law out there regarding the discharge of employer paid taxes in a Chapter 7 bankruptcy and has anyone had experience with a similar situation?

[AngelinaCatHub]

I've been looking around but to no avail. Possibly four years S. O. L. You are right, the employer pays all. They have a formula per employee. It is my understanding that you do not hold the money in a Trust account. The State does, you send it in quarterly. That's what I could understand.

I don't see you losing this case but I'm not from CA. I cannot see them going after any individual unless you were the OWNER not just an executive, or some crime was committed which is not an issue here. Was this a corporation? When is the case going to be heard? (Trial). 'Hub

http://law.findlaw.com/state-laws/civil-statute-of-limitations/california/

[tobee43]

hub is right as far as i know...(which may NOT be that far).

i have never heard of anything of the sort, however, i know, for example florida, the employees don't pay in......or don't pay much as we were told by one atty...i really don't know, hub would certainly know that answer better than i....however....(i know the state is in the process of changing some of the laws)....while where we worked, in the state of new jersey, collectively for 90 years between the two of us...we paid through the NOSE!!!! thousands upon thousands of dollars into OUR FUNDS.....via our employers... the employer had to match the amount and it was deducted via our pay checks.

now......if in calif., the employer FAILED to take out the tax and was obligated to do so, and never sent it in......i would think it's the employers responsibilty.

check you past pay stubs......and your old tax returns...or your old w2's...it should be broken out clearly there......that's your proof.....

[Hansioli]

It was a C corporation and the trial is in May. The brief is due at the end of April. That's what I'm trying to research. I will check out Findlaw. thanks. Any other ides would be great as well.

Thanks again.