Digital Services Tax Act removed from list of tax laws trustees must account for in bankruptcies

Plain-language summary · AI-assisted

The Digital Services Tax Act has been repealed from the list of federal tax statutes that a bankruptcy trustee must account for before distributing dividends to creditors. Previously, trustees were required to hold back funds to cover potential claims under that Act (along with other listed tax laws) and wait three months after filing returns before declaring a dividend. With that Act's entry removed, trustees no longer need to factor Digital Services Tax liabilities into that holdback calculation. Trustees administering estates and creditors awaiting dividends should be aware that the scope of required tax reserves has narrowed slightly. The remainder of the dividend-holdback rule — including the three-month waiting period and obligations under all other listed tax statutes — remains unchanged.

Who this affects
licensed insolvency trustees · creditors in bankruptcy proceedings · businesses undergoing insolvency administration