In Re Karen Lee Camilli, Debtor. Industrial Commission of Arizona v. Karen Lee Camilli
Opinion
Opinion
Schroeder, J.
The United States Bankruptcy Code establishes a priority for nondischargeable obligations owed by a debtor to a state that are in the nature of an “excise tax.” 11 U.S.C. § 507 (a)(8)(E). The statute in relevant part provides:
11 U.S.C. § 507 (a)(8)(E)(ii).
This case concerns a statutorily-imposed obligation of the debtor, Karen Camilli, to the Industrial Commission of Arizona (ICA) for workers’ compensation benefits the Commission had to pay to one of Camilli’s employees who was injured on the job. The ICA’s obligation arose because Camilli had failed to obtain workers’ compensation insurance in violation of state law. The sole issue is whether Camilli’s debt to the ICA is a “tax” within the meaning of the Bankruptcy Code, and therefore nondischargeable.
A divided Bankruptcy Appellate Panel (“BAP”) held that the obligation was not a “tax” but was instead a “fee” that was to be treated as any other dischargeable, unsecured debt. In re Camilli, 182 B.R. 247 (9th Cir. BAP 1995). The BAP majority decision reversed the decision of the Bankruptcy Court that had held the obligation nondis-chargeable as a tax.