Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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I

320.0000 INTEREST AND PENALTIES—Regulation 1703

Annotation 320.0020

320.0020 Bankruptcy—Postbankruptcy Interest and Penalties. The Board may collect postbankruptcy interest and penalties after a proceeding under Chapter XI of the Bankruptcy Act is closed. Section 17 of the Bankruptcy Act provides in part that a tax debt is not affected by a discharge in bankruptcy. section 371 of the Bankruptcy Act provides: "The confirmation of an arrangement shall discharge a debtor from all his unsecured debts and liabilities provided for by the arrangement, except as provided in the arrangement or the order confirming the arrangement but excluding such debts as, under section 17 of this Act, are not dischargeable." The cases of Salsbury Motors, Inc. v. United States et al., 210 F.2d 171, and Paul F. Bruning v. United States, 11 L.Ed.2d 772, support the Board's position that it may collect postbankruptcy interest and penalties after a proceeding under Chapter XI of the Bankruptcy Act is closed. The Board is precluded from claiming penalties in claims filed in both ordinary bankruptcies and Chapter XI proceedings because of the prohibitions contained in section 57(j) of the Bankruptcy Act. Although section 57(j) specifically applies to ordinary bankruptcy proceedings, under section 302 of the Bankruptcy Act relating to Chapter XI proceedings, it is stated that the provisions of the first seven chapters of the Bankruptcy Act apply insofar as Chapter XI proceedings are concerned where such provisions are not inconsistent. 10/9/64.