Definition:
A trust fund tax, in its general sense, is a tax that is taken out of sales or employee pay or set aside by an employer and which must be paid to a government entity or other entity.
Some examples of trust fund taxes are:
- Sales taxes and excise taxes
- Withholding taxes (withheld from employee pay for their income tax payments)
- Unemployment taxes
- Payroll taxes (FICA taxes)
In a business bankruptcy, the employee portion of trust fund taxes is not dischargeable; that is, the amount remains the responsibility of the business and must be paid.
