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log in. Discussion:Officer liability for corporate taxes (not p/r tax)
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Discussion Forum Index --> Basic Tax Questions --> Officer liability for corporate taxes (not p/r tax)
Discussion Forum Index --> Tax Questions --> Officer liability for corporate taxes (not p/r tax)
Kathyt (talk|edits) said:
| 16 November 2007
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| I have a new client who has been getting notices from the IRS on back corporate taxes for years, and she has ignored the notices. She was 50% shareholder with her husband, but they divorced in 2000, and a year later he died. The corporation did file any returns since 2000. She NEVER had signature authority in the corporate account, never signed the returns, and had no access to the money in the company at all. She is also a personal friend, and I knew her husband, and I know this story is true. But now she has a notice of intent to levy ($75,000)in the name of the corporation, in care of her name. My question is twofold, first, can they levy her bank account or only the corporate bank account? She just got a grant to fix her home (destroyed in the hurricane in 05) but she's afraid to deposit the check in her personal account. Is there any way they can levy her personal account for the corporate taxes? Second, what steps should we take to clear this up? She was still listed as an officer after the divorce, and her husband's kids opened up a new corporation after his death and just transferred the assets to the new corporation. The corporation that she was an officer of has no assets and has not been in operation since 2001. Any thoughts would really be appreciated.
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Sandysea (talk|edits) said:
| 16 November 2007
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| Why did she ignore the IRS? Nobody closed the corp at the death of the husband? Did they file joint returns on their 1040's?
Why not file the returns? They are intending to levy since she ignored all the notices from IRS.
She should be afraid...sounds much like tax evasion to me....but who am I to judge?
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Irsfixer (talk|edits) said:
| 16 November 2007
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| Two possibilities. One, the bills are for the actual 941 taxes for the corporation. In this case, they cannot levy her accounts. Second possibility is that these are for the Trust Fund Recovey Penalty assessed against her. In this case, they can and will levy her accounts.
What to do depends on which is the case. Not enough facts to advise and I am not going to take the time to explain all the possibilities. The levy is easy to stop. Gets all the facts and report back. Consider a specialist.
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Irsfixer (talk|edits) said:
| 16 November 2007
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| Should add that if these notices are for corporate income taxes - it is unlikely they can go after her for them. There are a lot of loose ends though.
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Mscash (talk|edits) said:
| 16 November 2007
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| IRS can not levy on her bank account. If there was personal liability (alter ego or something like that) there would have been a demand made in her name. The children who transfered assets of the old corporation into a new one may be looking at some transferee liability under Sec 6901.
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Kathyt (talk|edits) said:
| 17 November 2007
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| Thank you so much for your responses. It is not p/r tax, it's income tax, mostly from an audit of 1999. The children who transfered the assets did not do anything with the old corporation, they simply wrote a check to transfer the money, and began using the fixed assets in the new corp. I have no idea how they handled that on the books of the new corp, but I know they did nothing with the old corp (I'm sure they didn't want the tax liability of the old corp so they just opened a new one). My client is not on speaking terms with the children anyway, (step kids & it was a very ugly divorce). So in this case, should she just ignore the notices? If they can't come after her on this, why should she waste her money to pay someone (I'm not sure I'm qualified, I don't deal with this type of thing) to fix it if they can't go after her on it? Am I missing something?
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Dennis (talk|edits) said:
| 17 November 2007
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| You might try telling the IRS what you have told us, something that should have been done a long time ago. ♫
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CrowJD (talk|edits) said:
| 17 November 2007
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| Kathy, I think you should consider referring her also. The Court probably incorporated a property settlement in with her final decree. [Is this Miss. or LA.? LA. law, I can't really speak for]. The settlement might address issues regarding the corporation [not that it would be binding on the IRS, but it might be evidence of the lady's resigning as officer, selling her shares to H etc.].
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Natalie (talk|edits) said:
| November 17, 2007
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| It sounds like there may be an issue with the transfer of assets from the old corp into the new one. While the kids and the new corp are not your clients, this may be another point for your client. If the transfer was not done legally, I think the IRS can take those assets to apply them to the outstanding tax debt. Is that true Crow?
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CrowJD (talk|edits) said:
| 17 November 2007
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| Others here would probably know that better than me. We don't have enough facts. If there ever was a federal tax lien, it would apply to all property. Collections will go after the low-hanging fruit if it can. The usual practice would be to go after the corporation, and let a personal representative of the estate enforce the deceased shareholder interest in the (illegal) conversion of the property. But, I see issues with that too. Seems like they are presuming that she is still a 50% owner, treating her as an alter-ego (i.e. ignoring the corporate form, piercing veil due to actions of shareholders), saying pay-up, and leaving it to the lady to recover the converted property. I have a feeling a matter like this either ends up with an extremely easy and fast resolution, or a relative mess, depending on how it's handled at this point.
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