Can a business file bankruptcy for taxes owed?

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Can a business file bankruptcy for taxes owed?

Asked on May 19, 2014 under Bankruptcy Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

Most tax liability, especially taxes owed the federal government, is *not* dischargeable in bankrupty; not surprisingly, the government does not want to let people use a benefit the government gives them (the right to file bankruptcy) to get out of paying money to the government. It is therefore very unlikely that filing bankrupty over taxes will help.

Also, bear in mind that even if the business is a LLC or corporation, certain types of tax liabiltiy (such as for payroll taxes or sales tax) are "fiduciary" taxes, which means that the responsible owners or executives can be held personally liable for them.


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