Trust Fund Taxes

I would like to ask some questions regarding Trust Fund Taxes (TFT), since I have exhausted all resources on the internet and library and cannot find a clear answer. I owe TFT's from my failed business, but was able to make payment arrangements with the local taxing authorities to repay taxes owed at an affordable monthly amount. I am sending the delinquent returns that were not filed to the IRS so that they can give me the total amount of TFT's owed to them including penalties and interest. I don't know how much the total will be, but a good guess would be around $50k.

After reading lots of information on the IRS website and from various other sources, I am confused as to how to proceed with making payment arrangements with the IRS or how to proceed. I plan to file Chapter

7, but have read that even with a repayment plan the IRS will still place a lien on my home or vehicle. I also read that with an IRS lien on my credit report, it will be extremely difficult to re- establish credit after I file for bankruptcy until the IRS is paid in full. At this point, I am willing to sell my home to pay the TFT's, but am unsure if I have enough equity to satisfy the debt.

In this scenario, what would be best? Is it practical to file Ch. 7 or should I consider a Ch. 13 if the taxes are extensive or if I can't afford to repay them in full in 5 years or less on my own? Is it possible to include TFT's in a Chapter 13 for full repayment of interest, penalties and interest? Is it likely to expect more forceful action from the IRS for repayment other than a tax lien even if I voluntarily cooperate with a repayment plan? Is is difficult to remove an IRS tax lien once the debt is repaid in full? Is it possible to sell my home in the future with liens on it if I am aware that the liens and mortgage holders must be repaid first? Are there any other implications I did not mention with regard to TFT's and enforcement by the IRS?

To summarize, my objective is to repay all TFT's owed with the least amount of complications. Since my exhusband got me into this mess, I am being the responsible party and stepping up to resolve it. Sorry for so many complicated questions, but this is my last hope for answers. Thanks in advance.

How was the business structured, corporate or sole prop? If, corporate, and absent fraud, you may be held personally liable only for the unpaid employee (withheld) portion of the payroll taxes (the trust fund portion) and the interest that accrues thereon after the trust fund recovery penalty is assessed. If you operated as a sole prop, you are liable for the the full amount of unpaid employer and employee portions of the payroll taxes, and all penalties and interest that accrue thereon.

True

At this point, I am willing to sell my home to pay the TFT's,

A good choice if you can do it.

These questions are best left to a bankruptcy attorney familiar with your total financial situation.

Is it likely to expect more

A valid, approved payment plan would normally bar IRS from taking additional enforcement actions unless you are in default of any of the terms of the plan.

Is is difficult to

Not at all. Can be accomplished in minutes. But release doesn't erase the original filing in the public record (future potential creditors will know.)

Is it

No problem if the tax liens are paid in full at closing.

Are there

If your home equity is insufficient to pay taxes in full, you can sell the house and have it discharged from the tax liens as long as you sell at arms length, for fair market value, costs of sale are reasonable, and IRS receives all funds to which it is entitled based on lien priority.

You should consult with a competent tax professional immediately, before you agree to the assessment and collection of trust fund taxes and/or enter into a payment agreement. You may be able to negotiate a pre-assessment settlement of the trust fund liability and avoid any tax liens and enforced collection actions.