BK, IRS, Prisonl???

[Nightowl805]

Help!!

BK is inebitable but my question is this. My business is closing and for the last 1 1/2 year I have been using the payroll taxes to try and make it. Now I imagine I owe the IRS at least 100k in payrol taxes not counting penalties and interest or even my personal income tax for that matter. I am very worried about prison and am not really sure how I got here. I may be able to earn enough to pay off at least the "trust" portion of the payroll taxes over the next 1-2 years to hopefully avoid prison. In doing so, I would have to use any money I make and apply it towards that. It also means that I could not enter into a BK judgment at this time. I know that BK puts everything on hold (Except for Criminal Liability??) but even if it did I think in 5 years that the debt would be insurmountable.

I have even pondered leaving the country for a fresh start??

Whats happens if I ignore all of my other debts for 2-3 years until I can file for BK. 2 cars have already been repossessed that were upside down each about 25k.

I can go on and on about my irresponsibility but I need a little hope.

Any Ideas??

[Flamingo]

I don't think there is any easy way out of this for you but I highly suggest that you have a consultation with a criminal lawyer first and foremost to get the situation in some perspective as to what needs to be done first and go from there.

[MomIcantFindmy]

Maybe a Tax lawyer could help navigate this path for you. Best of luck!!

[justplaintired]

Well I don't know about your situation but I did want to wish you luck. I do recommend a good criminal lawyer. Hopefully you can find a way. I am surprised they didn't shut you down. I know someone who ran behind on employee taxes and they came to his place and said if he didn't make a payment, they'd shut him down. Did they ever contact you about this?

[rfassett]

Important questions include the entity type of the business, ie, corp, sole prop, etc. I'm not sure what your concern about prison is since even the IRS (at least today) does not have a debtor's prison. Explore this forum and in particular find southernbelle's posts. She talks alot about this issue. Your options may include a chapter 20 bk (a ch 7 followed by a 13) and /or an OIC.

There is a hope and even though the numbers sound huge, keep it all in perspective. This is not an insurmountable problem.

[Flamingo]

Important questions include the entity type of the business, ie, corp, sole prop, etc. I'm not sure what your concern about prison is since even the IRS (at least today) does not have a debtor's prison. Explore this forum and in particular find southernbelle's posts. She talks alot about this issue. Your options may include a chapter 20 bk (a ch 7 followed by a 13) and /or an OIC.

There is a hope and even though the numbers sound huge, keep it all in perspective. This is not an insurmountable problem.

It's the nonpayment of payroll taxes withheld on employees that is the bad thing here - the rest is as to his personal nonpayment of taxes can probably be handled by a tax attorney and the other financial issues via BK. However, he used already withheld payroll taxes for other uses. And it appears quite a good amount. Since that could consitute theft I would definately consult with a criminal lawyer and work down from there if not needed. One has to protect oneself and yes while there is no debtor's prison, there is prison for theft and fraud. I would fool around to much with the scenerio he provided and get legal advice/help quickly.

[HHM]

You are not going to prison. Businesses all over the country don't pay their withholding. Only a very small portion of those ever see criminal prosecution and that is only if their behavior was clearly fraudulent.

About all that happens with Withholding tax is if the IRS cannot collect it from the business, they will assess the owners (or other responsible parties) for the Trust Fund portion of the withholding tax. Thus, it simply becomes another debt you (granted, its a debt you cannot discharge in BK).

The IRS has 3 years from the date the Withholding tax was assessed, to assess you personally.

This is your plan action...
1. If you have not been filing your 941 returns, go ahead and file all returns that you have failed to previously file.
2. Then the ball is in the IRS court. If the business is done, who cares, there is nothing for the IRS to levy.
3. Eventually a local revenue officer will be assigned (if your estimate of the liability is accurate) and that RO will eventually contact you to schedule a 4180 interview, or simply ask you to sign off on your personal responsibility for the Trust Fund portion.
4. Once you are assessed the trust fund, depending on your financial circumstances, you can submit a personal Offer In Compromise.

In any event, don't make this turn of events feel as if its the end of the world, you are not going to jail. You are just one of 500,000+ business owners in the same boat. You are blowing the situation a bit out of proportion with thoughts of prison and criminal prosecution.

[Phillymanhere]

HHM, you are the man. I was hoping someone would weigh in with this view.

Nightowl, here was my first reaction: you think you're the only business owner to spend "special" money in order to stay afloat. NO @#*%ing Way. Are you kidding me? I don't know that much about this particular issue, but I know that there is no way that this is some odd or totally unusual occurrence.

Come on, business owners must do this all the time. In fact, I would bet that if you searched you could find a businessman's forum similar to this forum where small business owners discuss this very matter.

Follow HHM's advice. He's a moderator and the moderators here are really sharp.
Good luck. You're not going to be humiliated or shamed or sent to jail, though you will have to somehow pay this money back it seems.

[Nightowl805]

Thank You!!!

You are not going to prison. Businesses all over the country don't pay their withholding. Only a very small portion of those ever see criminal prosecution and that is only if their behavior was clearly fraudulent.

About all that happens with Withholding tax is if the IRS cannot collect it from the business, they will assess the owners (or other responsible parties) for the Trust Fund portion of the withholding tax. Thus, it simply becomes another debt you (granted, its a debt you cannot discharge in BK).

The IRS has 3 years from the date the Withholding tax was assessed, to assess you personally.

This is your plan action...
1. If you have not been filing your 941 returns, go ahead and file all returns that you have failed to previously file.
2. Then the ball is in the IRS court. If the business is done, who cares, there is nothing for the IRS to levy.
3. Eventually a local revenue officer will be assigned (if your estimate of the liability is accurate) and that RO will eventually contact you to schedule a 4180 interview, or simply ask you to sign off on your personal responsibility for the Trust Fund portion.
4. Once you are assessed the trust fund, depending on your financial circumstances, you can submit a personal Offer In Compromise.

In any event, don't make this turn of events feel as if its the end of the world, you are not going to jail. You are just one of 500,000+ business owners in the same boat. You are blowing the situation a bit out of proportion with thoughts of prison and criminal prosecution.

Thank you so much...I was going nuts inside of my head thinking the worst. Do you think I should file bk first and than deal with the IRS?

[HHM]

Thank you so much...I was going nuts inside of my head thinking the worst. Do you think I should file bk first and than deal with the IRS?

I don't think you need to file BK first. At the very least, you want to file any missing tax returns, allow the tax, penalties, and interest to be assessed (which can take 6-10 weeks from the date you file the return), and then start going to consulations with attorneys to consider your BK options.