What are my options to protect my assets if I’m being sued by state in which I don’t live?
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What are my options to protect my assets if I’m being sued by state in which I don’t live?
I am being sued by a state for unpaid inventory taxes from 3-7 years ago. I live in another state where most of my assets and credit union accounts exist. Can the state that is suing me claim those assets? First of all, the amounts are not correct – high estimates. I never received any prior notifications this was owed and the state allowed me to dissolve my corporation. They have added one penalties and interest which are ridiculously high.
Asked on February 20, 2016 under Bankruptcy Law, Alaska
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
Certain tax debts are ones for which the responsible corporate officer is personally responsible for, even though they were incurred by the corporation; these are what are called "fiduciary" taxes, because they are taxes collected on behalf of others (e.g. payroll withholding; sales taxes). If you what are calling "inventory taxes" are actually a form of sales tax, then you would be personally liable.
If you are liable, they can reach your personal assets, including real estate and bank accounts (credit union accounts) in another state, though doing so is not particularly easy and is generally a multi-step process. Anything you do to "protect" your asset will likely fail if you do it now, once you know you are being sued: a court could set aside any transfers, trusts, sales, etc. that appear to have been done for the purpose of defrauding the party suing you by hiding assets.
If you didn't pay taxes, you will have to pay interest and penalties. You can, of course, challenge the amounts, and also the base amount of tax, and only need to pay the provable unpaid tax and any properly calculated (according to statute and regulation) interest and penalties.
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