After I received the following letter, I reached out again to prolific commenter, “Addie Pray,” our resident legal expert who gave some great law-related advice last month. She was nice enough to extend some of her superstar legal expertise again to answer the following letter:
Well, needless to say the economy fell and they lost nearly everything, including their house.
Now, at 24 years old, I’m frustrated, anxious, and embarrassed because I’m stuck with an enormous tax debt that isn’t mine with no foreseeable way out. I can’t afford to hire a lawyer or bring myself to turn in my parents. Among other things, I’ve also been disqualified for financial aide because of this, which forced me to quit school suddenly without explanation.
I feel like no one can relate to my situation which makes me feel incredibly alone. How can I rebuild my life? — Reluctant Business Owner
Wow, your parents – pardon my French, but quels dicks! The level of premeditation that went into screwing you over is sickening. I don’t think you fully comprehend that.
Sure, you can blame the economy; your parents did not anticipate that curve ball. But they schemed and plotted against you every step of the way! They waited until you turned of legal age. Preying on a child’s love and trust, they tricked you into assuming ownership of the business, but just the liabilities so it seems. (Did you receive any of the profits you were entitled to as the owner? If taxes were owed, I assume there were profits at one point.) The coup d’etat? They chose not to pay taxes shortly after dumping liability onto your unsuspecting lap. (How convenient for them!) They continued to lie to you every day about your role in the business, as your liabilities grew. Were they ever going to tell you? Do you think these events
happened by chance or with good intentions? How do your parents sleep at night?!
I’m livid just thinking about this. I am glad you didn’t ask how to rebuild your relationship with your parents; I would have said, “Don’t bother.”
You asked how to rebuild your life, and I am here to give you some non-legal advice to go get legal advice. Unfortunately, you can’t rebuild your life without hiring some good lawyers. (“Oxymoron!” There, I said it first. Touchée!) I know money is tight, but this is one of those necessary expenses like rent, electricity, and … cable.
If you had a chest pain, you’d go see a doctor, right? Well, your legal pains will not go away if you don’t go see a lawyer. The IRS will not forget about the taxes you owe, and Fannie Mae will never help you.
Lawyers are trained to “issue spot,” which means identify legal issues based on the facts presented. When I read your letter, a few ideas popped into my head that I’d be interested in looking into if I were you:
• Suing your parents to set aside the transfer of ownership based on fraud and to put the ownership back in the rightful owners’ names (i.e., your parents);
• Filing for bankruptcy individually and/or the business (I wonder if there are other creditors out there besides the IRS?);
• Dealing with the IRS to see if it will consider waiving the penalties and late fees that you are likely incurring as we speak;
• Reviewing the business’s corporate documents (e.g., the operating agreement if the business is an LLC or the articles of incorporation if it’s a corporation), which should detail how the profits are distributed and may provide that the money was to be distributed to members to pay taxes;
• Suing your parents for such profits earmarked for taxes; and/or
• Suing your parents for damages that you’ve incurred to date as a result of their fraudulent conduct (and possibly your attorney fees should you prevail).
To learn about these possibilities and more, please hire an attorney – a bankruptcy lawyer, a tax lawyer, and/or a civil litigator well versed in corporate law.
I understand your hesitation to “turn in” your parents as you say, though less so considering the harm they’ve caused you. Remember, we are not talking about locking them up in jail or kicking them to the curb while you score an undeserved windfall. This is about reversing the legal nightmare – the best you can – that your parents created, and trying to make yourself whole again.
[Disclaimer: The information contained in this Website does not constitute legal advice, nor does it create an attorney-client relationship. You should contact your attorney to obtain advice with respect to your particular issues.]
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