Can theIRS shut down my business for not being able to pay my payroll taxes if I am currently under personal bankruptcy?

UPDATED: Sep 17, 2011

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Can theIRS shut down my business for not being able to pay my payroll taxes if I am currently under personal bankruptcy?

Asked on September 17, 2011 under Bankruptcy Law, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

You should consult with a bankruptcy attorney for a more definitive answer, but you facing at least one, if not both of the following problems:

1) Tax debts are not discharged in bankruptcy; while collections efforts of them may be temporarily stayed or halted while the bankruptcy proceeds, that's a temporary stay at best--you can't eliminate the tax debt or stop the IRS from ultimately collecting.

2) If the business is a corporation or LLC, it is separate from you--it is its own legal entity or "person"--and therefore your personal bankruptcy does not affect it any more than your personal assets, etc. would be affected if a corporation in which you were an investor filed for bankruptcy.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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