We owe sales taxes on a 5yr incorporated business, can we still file bankruptcy?
We owned a small flower shop. that made no money in 2003. We closed shop but didn’t file bankruptcy. Now the IRS is at our front door wanting payment in full.
We don’t have the money, what should we do?
Are these sales taxes owed to your city/state? Or IRS taxes on the profit/sale of the business. Important to understand the difference.
Talk with a very experienced bankruptcy attorney. You probably also want to talk with an enrolled agent or a tax attorney, especially if you didn’t file a tax return reporting the loss on the flower shop back in 2003.
There are rare cases where tax debt can be discharged in bankruptcy, and the starting point for all of them is that the tax debt has to be at least three years old. It looks like you meet that starting point. Now the next thing to do is to determine if you legitimately owe these taxes (if not, then a dispute/appeal process needs to start) and if you do owe them but can’t pay them, figure out if you can offer a compromise or should consider either a payment plan or bankruptcy.
December 14th, 2009 at 12:20 amIRS debt CANNOT be discharged in bankruptcy. Filing bankruptcy would not have helped you. You must pay your dues to the taxman, because he WILL haunt you until the debt is paid off.
December 14th, 2009 at 12:20 amSomething is not right here.
IRS is not interested in Sales Tax.
And how do they know you owe?
December 14th, 2009 at 12:20 amIf it is sales tax, it is not the IRS. It would be your state department of revenue/taxation.
Sales taxes are trust fund taxes in that you only collect them on behalf of the state. It is never your money.
This debt is not going to go away. Make sure that the sales tax returns were filed and that the state isn’t just estimating your liability. They tend to estimate high.
December 14th, 2009 at 12:20 amIRS doesn’t collect sales tax, what taxes are you talking about?
December 14th, 2009 at 12:20 amwhat did you file in 2003? a Sch C or nothing at all?