George

This is a bankruptcy case. The issue is whether the claim of the California Uninsured Employers Fund (“the Trust Fund”) 1 against an employer who failed to purchase workers’ compensation insurance is an “excise tax.”

Facts

Owen and Deborah George petitioned for bankruptcy under Chapter 7 on October 20, 1998, and obtained a discharge from debt on January 4, 1999. A year later, on February 7, 2000, they were found liable on a debt for $116,000. The debt arose because they had failed to cover an employee injury by purchasing workers’ compensation insurance or meeting state requirements for self insurance, as required by law.

The Trust Fund filed a lien against the Georges’ real property. The Georges filed a complaint in their bankruptcy case to establish that the debt had been discharged and to avoid the lien. The Bankruptcy Court held that the Trust Fund’s claim was not an “excise tax,” so the debt was discharged and the lien was void. The Trust Fund appealed, and the District Court reversed. The Georges appeal.

Analysis

Among the exceptions to discharge in 11 U.S.C. § 523 are taxes of the kind and for the periods specified in subsection (a)(8) of 11 U.S.C. § 507 , the…