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Discussion:Bankrupt nonprofit owes IRS $4000 PR tax - president & board liability

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Discussion Forum Index --> Basic Tax Questions --> Bankrupt nonprofit owes IRS $4000 PR tax - president & board liability


Discussion Forum Index --> Tax Questions --> Bankrupt nonprofit owes IRS $4000 PR tax - president & board liability

Legal2013 (talk|edits) said:

9 April 2013
[[Sec. The president and check signor of short-lived nonprofit corp has $2000 remaining in the bank but never submitted any payroll withholding (due to short life of nonprofit - not due to intent.) She failed to keep in reserve the liability to IRS. It was underfunded from the start and she had no accounting experience.

I suggested she pay me $300 from $2000 remaining, and I start work on resolving with the IRS. I am aware that she and the board of directors have liability to the IRS. I don't have experience with IRS willingness to pursue such a small claim. I also presume that the IRS must take some tedious steps to attach liability beyond the nonprofit - ie to president and board of directors.

Should I just write to the IRS offering the $1700 check account balance, pointing out that any further haggling will just eat away at the remaining $1700 with legal/accounting fees?]]

Fsteincpa (talk|edits) said:

9 April 2013
Board has personal liability. IRS may accept, but odds are they will look for the responsible party. This is usually the only thing board liability does not protect them from.

Mscash (talk|edits) said:

9 April 2013
The available funds should be paid to as designated payment of the withheld/trust fund portion of the tax liability. Just guessing based on experience, I'd say of $4,000 due, about $3,000, maybe less, will be withholding tax so money in the bank will pay most of it. The remaining balance is so small that it may be possible to get it classified as uncollectible by ACS. It is unlikely to ever be assigned to a revenue officer to conduct a trust fund recovery penalty investigation because of the small balance.

Mscash (talk|edits) said:

9 April 2013
The available funds should be paid to as designated payment of the withheld/trust fund portion of the tax liability. Just guessing based on experience, I'd say of $4,000 due, about $3,000, maybe less, will be withholding tax so money in the bank will pay most of it. The remaining balance is so small that it may be possible to get it classified as uncollectible by ACS. It is unlikely to ever be assigned to a revenue officer to conduct a trust fund recovery penalty investigation because of the small balance.

PHIL MOODY (talk|edits) said:

9 April 2013
Wow, you all must deal with revenue officers different than I do.

$300 fee for past due payroll taxes and responsible party issues appear to be on the low side.

Fsteincpa (talk|edits) said:

9 April 2013
Phil, could you expand on that comment?

Not the low side one. lol

Kevinh5 (talk|edits) said:

9 April 2013
Do note that you would want a separate engagement with the non-profit entity and one with a responsible party. Conflict of interest would prevent you from representing more than one responsible party. Immutable, in my opinion.

PHIL MOODY (talk|edits) said:

9 April 2013
FSTEINCPA: I think I posted this here a couple of years ago, but one year a client had a revenue officer show up and threaten to place a lein on their bank account because there was no record of a FTD for the prior month's payroll taxes being paid. I thought it was a joke, but I actually went to the clients office, examined the agent's ID (I thought it was sometype of scam). Real agent, I even called his group supervisor to make sure. I was so certain that this could not be happening.

Two weeks later, he showed up at another client. This time I recognized him.

I have never seen or heard from him again.

EatonCPA (talk|edits) said:

9 April 2013
We have one kind of like that around here. He drove over an hour and a half out to the boonies to one of our clients' homes (although that was the registered business address) because they had not mailed in a 941 report. Mind you, all the monies were paid, it was just that the report itself had never been filed. He actually did that twice to the same client. I understand wanting compliance but all I could think about was my tax dollars paying for him to drive 3+ hours for two pieces of paper. In the meantime, we now make that client come to our office to sign the 941s, which we then put in an envelope and mail directly from here.

Podolin (talk|edits) said:

9 April 2013
I hope you add the postage and stationery cost to his fee.

Fsteincpa (talk|edits) said:

9 April 2013
Wow, I thought those kind of RO's only visited clients with a history of issues. RO's don't just go out to clients places for a 30 day late filing when everything else is all kosher.

If no other issues, that is kind of odd.

Mscash (talk|edits) said:

10 April 2013
This thread seems to have got a bit off track.

There would only be a conflict of interest if there was finger pointing by the various potentially responsible people with each saying the other was responsible. I suspect that if my suggestion above was followed the matter would become a non-issue.

Skassel (talk|edits) said:

11 April 2013
As usual, Mscash is correct.


As to Fstein's comment, you will find some Revenue Officers who will make field calls just to get out of the office and will travel as far as they possibly can on a regular basis. The Revenue Officers that do that are generally the dinosaurs that haven't turned into fossil fuels and there are fewer and fewer of them left.

Fsteincpa (talk|edits) said:

11 April 2013
Steve, one would think they have real work that needs to be done. lol.

I always love seeing the looks on clients faces when they come and describe the agent and I can say, oh yeah, that's Karen, or Dave or whoever.

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