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“A Dash of SALT in Bankruptcy Proceedings”

October 4, 2021

Article by Jennifer Karpchuk and Jarrod Martin on “A Dash of SALT in Bankruptcy Proceedings”

Tax Notes

In an article published in Tax Notes on October 4, 2021, Philadelphia-based Shareholder Jennifer Karpchuk and Houston-based Shareholder Jarrod Martin explain the important state and local tax considerations in bankruptcies. “While bankruptcy can discharge some taxes, to the shock of many individuals, it does not eliminate all of them,” said Karpchuk and Martin.

The article outlines the different types of SALT liabilities (secured or unsecured) and the different groups of claims: priority and non-priority claims. Karpchuk and Martin discuss that “priority unsecured tax claims are any income, employment, sales, or property tax claims that cannot be discharged in bankruptcy.” Karpchuk and Martin further explain that when a bankruptcy case is filed, states and localities can file proofs of claim with the bankruptcy court for repayment of any secured or unsecured claims that they have against debtors.

“Bankruptcy can absolve several — but not all — debts. When considering bankruptcy or while in the throes of bankruptcy proceedings, don’t forget the SALT,” said Karpchuk and Martin.

To read the article in full, subscribers may click here.