Dissolving a Company that owes 941 Payroll Taxes: What About the Assets of the Company?

Many of our clients at WATAX - are considering dissolution of their company as a way of mitigating the damages of a 941 tax issue. As we described here: 3 Year Rule for Corps - dissolution in many situations might just eliminate the tax problem - as the debt "goes to the grave" with the business. However -- many businesses naturally have "assets" when the dissolve. What does this mean to your dissolution or in the case - where somebody wants to "purchase" your business or assets?

Selling the assets and making them lien-free. Example:  Brown, Inc. has a $120,000 941 payroll tax debt and has equipment that is worth $20,000.00 for quick value. They have decided to dissolve. Assuming that the equipment is un-encumbered with bank loans- the owners "in theory" have to give the value of these assets to the IRS. But what if someone wanted to buy the business and/or their assets? Well - that would require the owners to get an "appraisal" of the assets and have their tax professional contact the IRS to essential clear the assets of the tax lien so they can be acquired "lien-free."

What if there is no buyer? If the IRS - has someone assigned to your case -- you will definitely need to sell the assets to pay the tax debt and move on. If there is NO ONE ASSIGNED to your case - you should list the value of the assetsin a folder for recordkeeping - being fully prepared to pay the IRS the value of them - if they contact you later on.

As we have discussed previously - the IRS has 3 years to assess the debt against you personally if you had a corporation. If you were a sole proprietorship they can assess you for 10 years after the tax liability is created. These statutes aside - if you have assets - you have a lot to consider. If you have a buyer - even more things to contemplate. 

Want to size up your 941 issue ? Should you stay open? Dissolve?  Give us - the 941 tax problem experts - a call at WATAX 1-888-282-4697 or EMAIL us HERE and we'll contact you!

Three YEAR rule for assessment of 941 Payroll Taxes. Is the IRS pursuing a ghost?

As we have written on the 941 blog before - if a corporation closes owing 941 payroll taxes and three years pass by, the IRS forfeits its opportunity to assess the tax liability against the owners. Back in 2007, we guided a cleaning company to dissolve their corporation back. That company had about $100,000 in 941 payroll tax liabilities. Six years later - just last week - the IRS called to collect the debt from them. We indicated to the IRS agent- "you missed your opportunity to assess." The agent reviewed the file and came to the same conclusion - "you're right."

The case was easily resolved by us disclosing to the IRS that the business had no assets when it closed and that was it! Don't forget folks - when you have a corporation, partnership or LLC (with multiple members) - the three year rule always applies. The IRS has to assess the owners personally within three years of the debts. Otherwise - the liability dies with the entity!

What kind of entity do you have? Corporation, partnership, LLC, sole prop? What kind of 941 payroll tax liability do you have? Call us at 888-282-4697 or EMAIL us HERE and we'll contact you! Staff of Washington Tax Services. 

You are an Open and Operating Corporation: Can you file an Offer in Compromise on Unpaid 941 taxes?

In our 25 plus year history -- we at Washington Tax Services have had changing viewpoints around the IRS Offer in Compromise program as it relates to open corporations who owe the IRS. Previously - we were very skeptical about an open corporation filing an Offer in Compromise on unpaid 941 taxes based on what we saw from the IRS. In fact - very recently - we discouraged companies from doing Offers --almost unequivocally. Well -- based on some new attitudes we have seen from IRS agents in the field:  we are now...doing Offers - albeit limitedly -- for some corporations on their 941 payroll taxes.

Well -- like any Offer in Compromise -- your business will qualify for this procedure if you can clearly demonstrate an inability to pay back the debt!  As written on our other blog:  Offer in Compromise Rule Changes for 2012 the IRS Offer rules changed dramatically in 2012. The IRS has reduced the disposable income required in an Offer from 48 months to 12 months. These rule changes significantly reduced what you are required to pay in Offer -- if you qualify.

While most 941 payroll tax cases are still resolved thru payment plans and penalty abatements and/or dissolution of your entity, the Offer in Compromise program is increasingly being used as an option for companies that owe 941 taxes.

Does your open business owe 941's? Does your closed business?  Do you owe trust fund taxes from a closed business?  We are ready to answer your questions and to see if tax representation will benefit you.  Call us at 1-888-282-4697.  Marty Griffith, Tax Resolution Expert at Washington Tax Services.

When the IRS is ready to shut you down for 941 Taxes: Can you Get a 2nd Chance or a 3rd Chance? ONE PAYROLL DEPOSIT AT A TIME.

Licensed tax professionals like our staff here at Washington Tax Services are often the final resort for a business that has fallen behind on 941 taxes. The IRS is very punishing to businesses that fall behind on their 941 taxes. Depending on the personality of the IRS Revenue Officer handling the case - they may very well try to LEVY your company OUT OF BUSINESS if you aren't careful.

When we are representing a company that owes 941 taxes ALL THE WAY to the most recent quarter, we try to focus the IRS' attention on our client getting current on taxes NOW. We have our client FOCUS on one PAYROLL CYCLE AT A TIME. So, for example, we don't care if you haven't paid any taxes for the Fourth quarter of 2012:  just focus on the next PAYDAY! Send your proof of deposit slip or payroll coupon to the IRS agent on your next payday.

And then:

focus on the next PAYDAY! And so on -- what we are trying to do is: build good will with the IRS before we resolve your BACK TAXES.  The IRS levy faucet gets shut off.  And you just try to rebuild your company to profitability while staying current on your PAYROLL TAXES.

After a month or two of staying CURRENT...then we can go to the IRS and negotiate a solution on your back 941 taxes.

Need a 2nd or 3rd chance with the IRS on your 941 tax issue?  Give us a call at 1-888-282-4697 or EMAIL us an explanation of your tax problem HERE and we'll contact you.  Marty Griffith and the staff of Washington Tax Services.