Bankruptcy Taxation

When Are Taxes Payable in Chapter 13 Cases

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]