In re Carpenter, 519 B.R. 811

Debtors are former corporate officers of Big Sky Fire Protection, Inc.; UID filed Proof of Claim No. 5 for unpaid unemployment insurance taxes assessed under Mont. Code Ann. § 39-51-1105 against the officers personally.
Debtors objected, arguing the liability is vicarious and that the assessment is not a tax against them for priority under 11 U.S.C. § 507(a)(8).
UID conceded the obligation is an excise tax and sought priority treatment under § 507(a)(8)(E) for unpaid UI taxes, interest and penalties.
The parties agreed the total claimed was $78,757.29; the court found $78,632.29 entitled to priority and $125.00 (a statutory penalty) nonpriority unsecured.
The court analyzed whether personal liability under the Montana statute changes the nature of the excise tax for priority purposes, distinguishing In re Hansen (BAP) which addressed § 507(a)(8)(C).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether officers’ personal liability under Mont. Code Ann. § 39-51-1105 is an excise tax entitled to priority under 11 U.S.C. § 507(a)(8)(E)	UID: liability is an excise tax on a transaction and entitled to § 507(a)(8)(E) priority	Debtors: liability is vicarious; nature of the tax did not shift to them—relying on Hansen	Held: personal liability is an excise tax under § 507(a)(8)(E); claim allowed as priority except for statutory penalty
Whether Hansen governs classification here	Debtors: Hansen controls and supports nonpriority	UID: Hansen concerned § 507(a)(8)(C), not § 507(a)(8)(E); distinguishable	Held: Hansen is distinguishable because it involved § 507(a)(8)(C) and a different collection concept
Whether the court must require the tax to have originally accrued to the debtor	Debtors: tax must have accrued to debtor to be priority	UID: § 507(a)(8)(E) requires only that debtor be liable	Held: No requirement that debt originally accrued to debtor; liability suffices
Whether statutory penalties are taxable for priority	UID: penalty included in claim	Debtors: challenge characterization	Held: $125 penalty is punitive and not entitled to tax priority; treated as unsecured nonpriority

New Jersey v. Anderson, 203 U.S. 483 (1906) (defines characteristics of a tax versus a penalty)
In re Camilli, 94 F.3d 1330 (9th Cir. 1996) (applies Lorber factors to hold certain statutory obligations are excise taxes)
Cnty. Sanitation Dist. No. 2 of Los Angeles Cnty. v. Lorber Indus. of Cal., Inc., 675 F.2d 1062 (9th Cir. 1982) (articulates four-prong test for determining a tax)
In re Hansen, 470 B.R. 535 (9th Cir. BAP 2012) (BAP held UI taxes were not priority under § 507(a)(8)(C); distinguished here)
In re Quiroz, 450 B.R. 699 (Bankr. E.D. Mich. 2011) (holds personal assessment does not change nature of excise tax for priority)
In re McAdam, 402 B.R. 473 (Bankr. D.N.H. 2009) (treats state-assessed personal liability for tax as tax for priority)
In re Mueller, 243 B.R. 346 (Bankr. D. Wis. 1999) (finding that a tax obligation remains a tax when assessed against an individual)
In re Suburban Motor Freight, Inc., 36 F.3d 484 (6th Cir. 1994) (discusses when statutory premium obligations are taxes)
In re Suburban Motor Freight, Inc., 998 F.2d 338 (6th Cir. 1993) (refines test to avoid double-priority and considers impact on private creditors)