Filing Chapter 11 Bankruptcy for Illinois Sales Tax
If your Illinois sales tax certificate of registration has been revoked in the Chicagoland area and the IDOR has rejected your installment agreement, Chapter 11 Bankruptcy may be your only option.
A payment plan for unremitted sales tax is usually your only bite at the apple. Once you default on your payment plan, it is completely within the IDOR’s discretion to allow you another chance. This is usually based on your track record and credit history.
Your business can file Chapter 11 bankruptcy on sales tax owed to the IDOR. With the new law of sales tax evasion in Illinois, not paying back unremitted sales tax is a felony and punishable by time in prison.
Bankruptcy should always be used as a last resort, when all other options of collecting money from family, friends, banks, and other commercial lenders have failed.
Filing for Chapter 11 bankruptcy on sales tax owed to the Illinois Department of Revenue provides the debtor with an automatic stay of protection. The business will incorporate all of its debt, not just sales tax, and propose an offer of payment to the U.S. Bankruptcy Trustee.
Call our law firm to discuss your options to file a Chapter 11 bankruptcy.
Documents Required for a Chapter 11 Bankruptcy
Chapter 11: Individual
- All monthly billing statements and collection agency correspondence and notices received within the prior ninety (90) days for all bills (mortgage, car, credit cards, bank loans, medical, student loans etc.) other than utilities (unless there is a utility bill default) and monthly billing statements for all corporate bills for which you have personal liability
- A list of personal property and household furnishings (item by item) with a valuation for each item representing the current value of the item
- Current account statements (bank, brokerage, financial, deferred compensation, pension, 401k, IRA, Education IRA or other account) for the prior 6 months
- All current paycheck advice(s) or stub(s) and sources of income for the prior 6 months for yourself and your spouse, if any
- All life insurance policy statement(s)
- Motor Vehicle, motorcycle, boat & other titles
- All deeds showing ownership of your residence or any other real property
- Copy of all appraisals of your residence or any other real property within last 2 years
- Prior two (2) years Federal 1040 income tax returns and amended returns
- Copy of any foreclosure suit, other lawsuit or legal proceedings filed or pending within last year
- Copy of any personal injury suit, workmen’s compensation suit or itemization of claim against any third party
- Copy of any current personal or real property lease(s)
- Information or itemization of any other personal property or real property not otherwise provided
- List of any prior addresses in last two (2) years and dates of occupancy
- List of payments totaling in excess of $600.00 to any single creditor within the prior 90 days and the date(s) and amount(s) of payment(s) made
- Monthly family budget
- Copy of your driver’s license and social security card
- A Credit Counseling Certificate received from an approved credit counseling agency within the prior 180 days and a copy of the debt repayment plan, if any developed by the approved credit counseling agency for you. (hbcce.org)
Chapter 11: Entity
- All account payables, monthly billing statements and collection agency correspondence and notices received within the prior ninety (90) days for all payables (mortgage, car, credit cards, bank loans, trade credits, etc.)
- A list of property (item by item) with a valuation for each item representing the current value of the item
- Current account statements (bank, brokerage, financial, pension, or other account) for the prior 6 months
- All insurance policy statement(s)
- Motor Vehicle & other titles
- Prior two (2) years Federal income tax returns and amended returns
- Copy of all lawsuit or legal proceedings filed or pending within last year
- Copy of any real property or personal lease(s), including equipment and service leases
- Information or itemization of any other personal property or real property not otherwise provided
- List of payments totaling in excess of $5,850.00 to any single creditor within the prior 90 days and the date(s) and amount(s) of payment(s) made
- List of all payments to officers and insiders in the one year prior to filing
- List of Accounts Receivable
- All financial statements issued in the last two years
Frequently Asked Questions
Can I file Chapter 11 bankruptcy solely for unpaid Illinois sales tax?
Body: Yes, a business can file for Chapter 11 bankruptcy specifically to address unpaid sales tax owed to the Illinois Department of Revenue (IDOR). However, the bankruptcy will typically include all business debts, not just sales tax.
Will filing Chapter 11 stop the Illinois Department of Revenue from taking action?
Body: Filing for Chapter 11 bankruptcy triggers an automatic stay, which halts collection efforts by the IDOR and other creditors while the bankruptcy process is underway.
What happens if I’ve already defaulted on a sales tax payment plan?
Body: Once you default on an IDOR payment plan, the department has full discretion whether to offer another chance, usually based on your financial history. If they refuse, Chapter 11 bankruptcy may be the only option left to manage your debt.
Can unpaid sales tax lead to criminal charges in Illinois?
Body: Yes, under Illinois law, failure to pay unremitted sales tax can be charged as a felony offense and is punishable by prison time, in addition to financial penalties.
What documents do I need to prepare for filing Chapter 11 bankruptcy?
Body: Required documents include recent billing statements, financial account records, tax returns, proof of income, property and asset valuations, insurance policies, and legal proceedings documents. Specific requirements differ for individuals and business entities.