A company owes payroll taxes for two years! Can they file Chapter 11 ???

Question

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especially when they have taken out such taxes each payday but never sent the money to the feds. In other words, they pocketed the deductions (the owners).

Answer 1

Payroll taxes are not dischargable in bankruptcy.  Even if the company files bankruptcy the owners of the company will be required to pay the payroll taxes.

Answer 2

The owners will soon be in jail and it will be a moot point.

You can steal from individuals and remain free if you have a really good lawyer and can prove you are really sorry, but you cannot steal from the IRS...

Answer 3

A company that owes back payroll taxes can and frequently does file Chapter 11 petition but will have to pay the taxes in full as part of its plan.  

As a practical matter, most Chapter 11s filed by small companies just make the death linger longer.  The owners will be personally liable for any unpaid federal withholding taxes and probably any state taxes as well.