Penalties and Interest on Employment Taxes

Employment tax liability cannot be discharged in Chapter 7 bankruptcy. If you are liable to the IRS for payment of employment taxes collected by your company you cannot wipe out your IRS debt by filing bankruptcy. A caller asked whether interest and penalties on past due employment taxes can be discharged even though the base tax liability must still be paid.

I believe the answer is that interest and penalties cannot be discharged for employment taxation. The general rule is that if any tax liability to the IRS is nondischargeable in bankruptcy, the interest and penalties on such debt is also not dischargeable.