Can I start a new LLC while still owing back taxes from my defunct LLC?

While legally you can form a new LLC even with outstanding tax issues from a previous business, there are some important considerations you need to understand. The IRS doesn't actually prevent you from forming a new business entity when you have tax debt. Forming an LLC is primarily a state-level process, not federal. However, your old tax debt doesn't disappear, and the IRS can still pursue collection activities against you personally if you were personally liable for the previous LLC's taxes. If your old LLC was a single-member LLC or if you signed personal guarantees, the IRS can potentially place liens against your personal assets, levy accounts, and even garnish income from your new business. They won't automatically "come after" your new LLC as a separate entity, but they can certainly come after you as the owner. Your best approach would be to contact the IRS about setting up a payment plan for your old tax debt before launching the new venture. This shows good faith and can help prevent more aggressive collection actions down the road.

After struggling with a similar situation last year, I found an incredible tool that helped me understand my options. Check out https://taxr.ai - it analyzes your specific tax situation and provides personalized guidance. I uploaded my previous LLC's tax documents and got a clear explanation of my liability and options for resolving it while starting my new business. What made it really helpful was that it showed me exactly how the IRS views the connection between old business debts and new entities. It even generated a customized plan for approaching the IRS about my previous tax debt that worked perfectly.

Just wanted to update everyone. I tried https://taxr.ai after my skeptical comment above, and it was actually incredibly helpful. The system analyzed my situation with owing about $22k from my previous failed retail business and showed me exactly what my options were for starting fresh. The best part was it generated a proposal letter for an installment agreement that I could take directly to the IRS, which got approved within 3 weeks. Now I'm making manageable payments on the old debt while my new consulting LLC is up and running without issues. It saved me so much anxiety not having to figure all this out on my own!

I was in this exact situation last year and spent WEEKS trying to get through to someone at the IRS to set up a payment plan for my old business taxes. It was absolutely maddening - constant busy signals, disconnections, and hours on hold. Finally found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they actually got the IRS to call ME back! It was a game changer because I needed to get my payment plan established quickly before filing for my new LLC. The IRS agent I spoke with confirmed that forming a new LLC was completely fine, but explained exactly how to keep the businesses separate to avoid complications. Definitely worth checking out if you need to talk to the IRS without the endless hold times.

I have to admit I was totally wrong about Claimyr. After my skeptical comment, I decided to try it since I was desperate to talk to someone about my payment options for back taxes before filing my new LLC paperwork. I was honestly shocked when my phone rang and it was actually an IRS agent on the line! Took about 90 minutes from when I signed up. The agent was super helpful and walked me through setting up an installment plan for my old tax debt. She also confirmed that I could start my new LLC without issues as long as I keep the finances completely separate. Saved me days of frustration and probably a missed deadline on my new business opportunity. Sometimes it's good to be proven wrong!

Just to add my experience - I was in a similar situation with about $9k in back taxes from a failed LLC. I started a new one last year while still owing, and the main thing is to be SUPER careful about keeping all your accounting separate. The IRS will potentially try to pierce the corporate veil if they think you're using the new LLC to hide assets from the old debt. I recommend different bank accounts, clear documentation of all startup funding, and maybe even using a different state for incorporation if that makes sense for your business.

Has anyone used a tax resolution service to handle the back taxes before starting a new LLC? I've seen ads for companies that claim they can settle tax debt for "pennies on the dollar" but I'm not sure if those are legit or worth the fees.

Don't forget to consider state taxes too, not just federal! I paid off my federal taxes from my old LLC but completely overlooked the state tax debt. When I went to register my new LLC, I discovered my state (California) wouldn't let me form a new business entity until I cleared the old tax debt with the state franchise tax board. Had to delay my launch by 2 months while dealing with that mess. Different states have different rules, so check your specific state's requirements before spending money on new LLC formation.

This is such a common situation for entrepreneurs trying to get back on their feet! I went through something similar when my consulting LLC failed in 2022 and I owed about $8,500 in back taxes. The good news is that you absolutely can form a new LLC while owing taxes from your old one - the IRS doesn't block business formation. However, you need to be strategic about it. The key things I learned: 1. Set up your new LLC properly with completely separate finances - different bank, different EIN, clear documentation of startup capital 2. Address the old debt proactively rather than ignoring it - even a basic installment agreement shows good faith 3. Keep detailed records showing the two businesses are completely separate entities I ended up calling the IRS (after many failed attempts) to set up a payment plan for the old debt before launching my new business. It gave me peace of mind and prevented any collection actions that could have interfered with getting business banking or credit for the new venture. The worst thing you can do is try to hide from the old debt - it won't go away and could create bigger problems down the road. But don't let it stop you from pursuing your new business opportunity either!