Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 170.0007.030


170.0007.030 Discharge in Chapter 7 Bankruptcy. The Board issued a Notice of Determination to the taxpayer on June 20, 1995 for the period January 1, 1984 to June 30, 1991. A timely petition for redetermination was filed on July 6, 1995. On September 6, 1996, the taxpayer filed Chapter 7 bankruptcy. The bankruptcy, a no asset case, was closed on November 27, 1996. No decision on the petition has been issued.

In King v. Franchise Tax Board (9th Cir. 1992), 961 F.2d 1423, the court stated that taxes measured by income or gross receipts that are assessed within 240 days of the filing of the bankruptcy petition are not dischargable in bankruptcy. The court held that, under California law, a tax is "assessed" for bankruptcy purposes when assessment becomes "final." Accordingly, since taxpayer filed a timely petition for redetermination and no decision on the petition has been issued, the liability is not "final" under California law. The tax had not been "assessed" at the time that the taxpayer filed its bankruptcy petition and the liability is not dischargable. 6/24/97.