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

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.

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Attorney answers 3


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!


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 response does not create an attorney client relationship. Inquirer should seek the advice of a duly licensed attorney within that particular jurisdiction.

Ruben Fuentes

Ruben Fuentes


Keep in mind that a LLC or corporation is a different entity from their owners. Is a separate entity altogether.


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 Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

Ruben Fuentes

Ruben Fuentes


Even if the tax were dischargeable it could be more expensive to file for BK just to avoid taxes for $400.00 that

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