Chapter 11 for Restaurants and Handling Payroll Taxes


Bar and restaurant owners in the Tampa Bay area know how much effort it takes to run a successful business. Even the most hardworking restaurant owners can struggle with debt, and they may need to seek help from a bankruptcy lawyer in order to get back on track. You will first need to decide whether you want to keep your business open during and after a Chapter 11 bankruptcy or whether it makes more sense to file for Chapter 7 and close the business. It is important to learn about ways of handling specific types of debt and to speak with a Tampa Bay bankruptcy lawyer about whether the types of debt you owe are eligible for discharge if you decide to file for bankruptcy. 

Understanding Required Tax Payments to the Florida Department of Revenue 

Unlike federal payroll taxes that a restaurant owner in Florida needs to pay, the Florida Department of Revenue does not have local payroll taxes that the employer owes. However, Florida restaurant owners and other employers often need to pay Florida unemployment insurance (UI) tax, which is now known as a “reemployment” tax. The reemployment tax is primary employment tax that employers in Tampa are required to pay. The Florida reemployment tax is separate from federal UI and payroll taxes that a Florida employer must pay.

When you open a restaurant, you are required to set up a reemployment tax account with the Florida Department of Revenue in order to make these payments.

Distinguishing Between State and Federal Tax Payments

Tampa employers are also required to make federal unemployment insurance tax and payroll taxes. As an article in Forbes explains, the Internal Revenue Service (IRS) requires employers to withhold payroll taxes from employee wages and to make those payments to the IRS. Failure to pay payroll taxes or federal unemployment insurance taxes can be a very serious matter.

How Tampa Restaurant Owners End Up With Tax Debt 

How do Tampa restaurant owners end up owing reemployment tax to the Florida Department of Revenue or payroll taxes (or other required taxes) to the federal government? Often bar and restaurant owners simply get in over their heads and do not mean to avoid paying taxes. For instance, reemployment taxes and payroll taxes may be due, but it turns out that one of the major appliances in the restaurant kitchen broke. The restaurant owner does not have enough cash on hand to pay for significant repairs and thinks she can pay her taxes late. As more unexpected restaurant costs arise, tax debt goes unpaid, and the restaurant owner can accrue additional fines and penalties.

What happens if you get behind on Florida reemployment tax payments or other types of tax debt? Can you file for bankruptcy and have these debts discharged? 

Can a Tampa Restaurant Discharge Debt Owed from Unpaid Taxes? 

During a Chapter 11 bankruptcy proceeding, it is important for a Tampa restaurant to continue paying state and federal taxes. Then, since Chapter 11 is a reorganization bankruptcy, it may be possible for a debtor to catch up on tax debts through the repayment plan. In general, a reorganization bankruptcy can give restaurant owners up to five years to complete a repayment plan. A restaurant owner also may be eligible to reduce tax debt with an “offer-in-compromise” (OIC).

If a repayment plan in Chapter 11 will not work to repay significant tax debt, a restaurant owner may be able to reduce tax debt with an OIC. The OIC, according to the IRS, is “an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed.”

Contact a Tampa Chapter 11 Bankruptcy Lawyer 

Many small businesses, including a wide variety of restaurants in the Tampa Bay area, struggle with debt. Many bar and restaurant owners have trouble paying bills, especially during the off-season, and that can include having difficulty paying the establishment’s payroll taxes. If you are struggling with debt but want to keep your restaurant open and get back on track with payroll taxes, you should speak with an experienced Tampa Chapter 11 bankruptcy attorney about your options. Contact Tampa Law Advocates, P.A. for more information about the services we provide to bar and restaurant owners throughout the Tampa Bay area.