Donna Genie answers whether you can go to jail for defaulting on a $23,000 EIDL loan after closing your business. Tax refund offsets are possible but slow and rare. Jail is unlikely unless there was fraud or you misused the funds.
$23,000
Donna Genie
April 20, 2023
Foreign. I'd like to share an email that I received from a listener about her Eidl loan. She says that she got an Eidl loan, closed her business and it was dissolved through the Secretary of State as well, closed the business bank accounts and she also had to file personal bankruptcy. The SBA loan has been a huge question of mine, causing me not to sleep at night as the notices are now coming in that it's time to pay. She says her loan was $23,000 and her bankruptcy attorney said that he didn't believe anything would happen. Her accountant, on the other hand, said she wasn't sure that she's heard of people going to jail over these loans, but it's only $23,000 so I think I might be okay. She wants to know what I think will happen. She also said that she was concerned that they might take a tax refund. All right, let's get some narrow, some looking at some circumstances surrounding the loans. First off, as I mentioned in my prior video, just had a call with the SBA office in South Carolina and it doesn't sound like anything is penetrating out to those regional state offices about Eidl loans yet. So that tells me that I really don't think the SBA has a plan yet and how they're going to handle all these businesses that have closed and the loan defaults. Secondly, yes, it is true that if you owe a debt that eventually it can pass through to other government organizations and they can try to offset. So if 20 years ago you had a bad loan, you might eventually see that it's coming back and they're offsetting your tax refunds based on that. Now, I will tell you that's a super rare case and I have not seen any of those in a really long time. Also, we all know the speed at which the IRS works and anything in our government which is very slow. So it will be many, many years to come in my opinion, before we see any kind of offsetting of debts. If there is going to be any. Third, she mentioned her accountant said you might go to jail. Nobody's to going going to jail for this kind of a loan. The people that you see in the media who are going to jail are high profile celebrities and people who took millions of dollars and went out and bought Bentleys and went on extravagant trips and bought a lot of possessions. Your average Joe business owner does not need to worry about going to jail over this unless you have fraudulently take money in these programs. And for that, honestly you need other cases. You don't need an accountant, you need a lawyer. So don't be afraid that you're going to jail over these. And business issues have happened for years and years. It's never easy, it's never fun, but they do work themselves out. So I want you to put your head on your pillow, take a nice sleep tonight and don't worry that you're going to go to jail over $23,000 in this cash case. Again, if you took out a five million dollar loan and you have a Bentley outside and a fancy house and you took a lot of vacations, you might want to ring up your attorney. But I think that's far and few between from our listeners who are viewing this and truly trying to figure out the best circumstance to make this loan and their business default be a palatable option so they can move on. So I will continue to keep you posted. If you have questions about an Eidl loan that you would like us to record a video about, please don't hesitate to send those in. Just as a reminder, we're not doing any consulting or work on trying to remove loans, but as a public service, we are keeping everybody abreast of what we hear. And as soon as we know something new, we will post another video. So please make sure to subscribe and continue to follow us for the latest and greatest. Please follow us on Facebook and Instagram. Please make sure to check out our blog and our website linked below. Subscribe to our YouTube channel and hit the bell to be notified when we post. You can email me@donnaopaccounting.com.
