How Can We Keep an Old Business Debt From Ruining Our Credit...?

Question

In 1999, we opened a business in the US and by the time 2000 rolled around we were basically bankrupt. We closed the business and moved back to our home state. The sales taxes due for the business was not paid in due manner and we owed nearly 4,000. We made several attempts to set up payments with that state and were told by different people that it had to be paid in lump sum. In the meantime, the total was gathering interest. Three years later we came into a settlement of 4,000 and decided to pay the state the business tax we owed. We contacted a lawyer who suggested we write a letter of abadement (sp) and enter our plea in the letter to be free of the interest. The state cashed the cashiers check but we never heard back from them. We called after several weeks and were told we still owed the interest and penalaty on top of that, and that they were compliing interest upon the interest. Should we just forget it and include a letter in my husbands credit report?

Answer 1

I am not sure, but, I don't think tax owed is as negative as being delinquent on personal loans. I would definitely include the letter and meanwhile, pay whatever you can, so eventually you will pay off. A good attorney may be able to help you, but, for $4000, I don't think it's worth it.

Answer 2

Unfortunately, I don't think the state is going to let you forget it. You need to get representation by either an attorney or accountant who can attempt to settle this matter for you.

If the sales tax was not discharged in a bankruptcy the state is going to hound you until you work out an arrangement and pay it off.

Answer 3

Good Luck! By paying the principal without an agreement to waive the interest, you have given the state no incentive to consider waiving the interest and/or penalties. If I were you, I would contact a tax lawyer in that state, and seek advice there.