Would a ch 7 personal bankruptcy discharge business(LLC) taxes and fees?

Asked almost 3 years ago - Santa Ana, CA

My LLC owes the city business license division $100 for the business license renewal. I have been talking to them about trying to pay it but would this fee be discharged in my bk? And I will still be able to obtain a new business license in the future with a new business?

I also have IRS late filing penalty fees of $400 that I owe on my LLC. I have also been talking to the IRS about trying to pay. Would these taxes be discharged?

If both fees can be discharged, would it be okay to discharge both government entity debts even after telling them i'd try to pay?


Thank you in advance.

Attorney answers (3)

  1. Arash Shirdel

    Contributor Level 14

    2

    Lawyers agree

    Answered . Your business debt cannot be discharged in your personal bankruptcy, unless you have signed a personal guarantee, i.e. personally guarantee on a lease. In any event, even if the debt was dischargeable in your bankruptcy, the LLC's debt would not discharged.

    Good luck to you!

    Attorney's response does is not intended as legal advice is intended for informational purposes only. Attorney's... more
  2. Dorothy G Bunce

    Pro

    Contributor Level 20

    2

    Lawyers agree

    Answered . Because your tax debt and business license fees were made by the LLC, not you personally, I doubt that they can be fully discharged by your personal bankruptcy. Even though you are a 100% owner of the business, an LLC is considered to be a separate entity.

    However, as a practical matter, if you shut down your business, the debt may be virtually uncollectiable when you file your personal bankruptcy. I would urge you to obtain qualified representation to protect your interests.

    Hope this perspective helps!

  3. Theodore Lyons Araujo

    Pro

    Contributor Level 20

    2

    Lawyers agree

    Answered . These taxes are probaly not dischargeable, but are of such a small amount that you should pay them anyway to make sure you are in good standing with the state and can end the corporation. You are not allowed to dissolve a corporation if it owes taxes, so they will continue to accrue even if they are discharable personally, which generally they are not.

    Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and... more

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