18 Oct Highway Use Taxes in Bankruptcy
And just when you think that things are a-turnin round,
You get a thousand board feet weighin twenty thousand pound
Weigh station’s open Just your rotten luck,
There goes the next payment on your used log truck.
If the finance company repossesses the log truck, will the hapless owner-operator in this ballad be pursued to the grave by nondischargeable highway taxes? Not necessarily, but a review of some relevant cases suggests that timing and other factors will be an issue.Claims for highway use taxes levied against truckers based on mileage driven and the weights of vehicles and their cargo turn up all too frequently in Oregon bankruptcy cases. A recent Missouri case (In re Trism, Inc. et. al., 311 B.R. 509, 8th Cir BAP, 2004) concerning the priority of a federal claim against a trucking firm cited an older Oregon Bankruptcy case (In re Clifford H. Dawson and Linda M. Dawson, 98 B.R. 519, 1989) in which the court determined an Oregon State claim against a log truck operator to be nondischargeable.
The 8th Circuit Bankruptcy Appellate Panel cited the older Oregon decision in determining whether Federal charges of $305,872.64 for operating overweight vehicles on national highways were an excise tax or a fee. In ruling for the IRS, the Appellate Court used In re Dawson as a basis for classifying a highway use fee as an excise tax.
In the Oregon case, the Dawsons had filed an adversary proceeding against the Oregon Department of Transportation claiming that Oregon State Highway taxes were fees, and therefore eligable for discharge in bankruptcy. The court ruled that they were excise taxes. This alone did not make them nondischargeable. Under Â§523(a)1, highway use fees classified as excise taxes are nondischargeable only if they were incurred within three years of the date of filing, or no return was filed, or the return contained willful misrepresentations designed to evade the payment of taxes. Taxes assessed against the Dawsons were incurred within three years of filing and therefore were excluded from discharge.
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