Case Summary:
The debtor brought this adversary proceeding to determine whether he should be discharged from his debt to the Wisconsin Department of Workforce Development ("WDWD") for unpaid unemployment insurance contributions of his corporation.  The Court found the debt to be nondischargeable under either 11 U.S.C. § 523(a)(1)(A) or 11 U.S.C. § 523(a)(1)(B)(ii) of the Bankruptcy Code.  Relying on the Eighth Circuit B.A.P. in In re Voightman, 239 B.R. 380 (8th Cir. B.A.P. 1999), the court found the unpaid unemployment insurance contributions to be an excise tax under § 507(a)(8)(E) of the Bankruptcy Code.  According to the court, the obligation at issue was an excise tax because it was "an involuntary pecuniary burden imposed by the State of Wisconsin on employers . . . for the public purpose of creating a 'gradual and constructive solution of the unemployment problem.'"  Finally, the court held that the debt was also nondischargeable under § 523(a)(1)(B)(ii) because this section "excepts from discharge any debt of an individual debtor for a tax where a return was filed late and within the two-year period prior to bankruptcy."  Because the debtor was liable for the debt as a responsible party, and the returns were filed late and within the two-year period prior to bankruptcy, the debtor's debt for unpaid unemployment insurance contributions is not dischargeable under § 523(a)(1)(B)(ii).

Statute/Rule References:
11 U.S.C. § 523(a)(1) -- Nondischargeability - Taxes

Key Terms:
Taxes - Dischargeability