Legal Question in Bankruptcy in New Jersey

Bankruptcy and Department of Labor Fines

My business is being audited by the department of Labor. Their contention is that the independent sub-contractors I use should have been classified as employees. I am going out of business this month yet they still want to proceed with the audit. If I take the business (an LLC) bankrupt, are fines issued by the department of labor dismissed as well if they conclude against me and if so, am I persoanlly liable? If I am, then will those debts be discharged on a personal bankruptcy?


Asked on 3/14/02, 9:18 pm

1 Answer from Attorneys
Glenn Reiser LoFaro & Reiser, LLP

Re: Bankruptcy and Department of Labor Fines

Corporations do not receive discharges in Chapter 7 bankruptcy proceedings. As for your filing a personal bankruptcy, fines or penalties that are payable to or for the benefit of a governmental unit are non-dischargeable in bankruptcy. Liability for certain taxes known as "trust fund taxes" pass through the corporation to the individual owner/shareholder. Without knowing more facts, my guess is that these potential fines by the Department of Labor would not be dischargeable in your personal bankruptcy case.

Glenn R. Reiser, Esq.

LoFaro & Reiser, LLP

201-498-0400

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Answered on 3/15/02, 10:21 am


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