While the Michigan Single Business Tax is history, personal liability for paying the tax is not. In a recent decision from the United States Bankruptcy Court for the Eastern District of Michigan (Rizzo v State of Michigan Department of Treasury Case No. 11-46502) the Court found that the single business tax was an “excise tax” on a transaction and therefore not dischargeable in Bankruptcy. However, a tax liability is a Priority Debt for purposes of a Chapter 13 Bankruptcy. That means the debt will be paid before other unsecured debt.
So if you find yourself in this situation consider a Chapter 13 to pay the tax debt and get a discharge of your other unsecured debt.
