Is it legal for a corporation that defaulted the IRS to file bankrupcy to get rid of IRS DEBT?

Question

this is a business that didn't pay the IRS its employees taxes for several months and want to file bankrupcy and create another 2 Companies LLC(limited liability)keep the assets and continue to operate..is this legal?the company doesn't have any $ other than equipment ,vehicles to pay the IRS.What happens if the IRS gets to find out about this plans of bankrupcy and the 2 new LLC companies before they happen? could they stop the bankrupcy and the business gets more in trouble for trying to avoid payment?

Answer 1

Bankruptcy is not something done in secret.  Corporation debts are not discharged in a bankruptcy; assets are just sold and any proceeds distributed to creditors.  If the owners want to start two new companies they would have to pay a fair price for the assets of the old companies as part of the bankruptcy proceeding.  

IRS cannot stop anyone from filing bankruptcy but you can be sure that an IRS employee will be looking at the file in bankruptcy court to see what it contains.  The officers of the company will be personally liable for the employee withholding and probably any unpaid state taxes.

Answer 2

The IRS cannot stop the bankruptcy but the bankruptcy does not get rid of IRS debt.  They will be audited very soon and will not get their LLCs started with the corporation's assets.  Near the top of the IRS audit priority list are the very taxes you mentioned: employee payroll taxes withheld but not passed onto the government.  As far as getting in trouble, yes, what the owners are trying to do is take definite actions aimed at escaping taxes and if the IRS feels they meet that definition, that carries criminal penalties, meaning very big fines and/or jail time.

Answer 3

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Answer 4

Taxes and tax penalties cannot be discharged in a Bankruptcy.

The IRS Could file an involuntary bankruptcy on them and sell their assets.

I seem some complexities, the new companies are different entities, not related to the old entities.

There should have been an audit in the bankruptcy to determine the assets and allocation of assets to pay the creditors.

So why would these 2 new companies be liable for the debts of a different company?