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Handling taxes during the Chapter 11 bankruptcy process

The Chapter 11 bankruptcy process can be a complex process as businesses can have different types of debts as well as different categories of creditors. In addition, creditors may receive different types of priority. During a Chapter 11 business bankruptcy, some types of debts may be more difficult to discharge than others so it is important to understand the complexities of the Chapter 11 bankruptcy process and how to develop a strategy to deal with complex business bankruptcy issues.

In general, Chapter 11 bankruptcy for businesses is a reorganization bankruptcy that allows businesses to reorganize their debts to return to profitability and renewed success of the business while, generally, the business continues to operate. One of the considerations that can arise during a Chapter 11 business bankruptcy are past due tax obligations. It is important to have a plan for addressing past due taxes to protect the business during the Chapter 11 bankruptcy process.

Because not every types of tax obligation is dischargeable through the Chapter 11 bankruptcy process, it is important to have a strategy that addresses debts that may be dischargeable which can free up resources for the business to address past due tax obligations. It is important to consider different types of taxes including sales taxes, payroll taxes, real property taxes and income taxes when developing an approach to past due tax obligations. Each type of tax obligation can be handled differently during the Chapter 11 bankruptcy process.

Chapter 11 bankruptcy is a resource available to help struggling businesses work their way back to success. Because the bankruptcy process can be complicated, which is also true of tax obligations, it is helpful to be well versed in options that may be available, such as the Chapter 11 bankruptcy process, to help businesses get back on their feet.

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