Monday, March 21, 2016

The 3-Year Personal Assessment Rule on 941 Taxes, Case Example

AS we wrote a few posts back, if you have a Corporation, Multiple Member LLC or Partnership and you owe 941 taxes, you can avoid personal assessment of these taxes against you if you can run out a three year clock. A recent case of ours illustrates how one individual avoided being assessed the trust fund taxes on about $250,000 in 941 taxes.

This individual in Minnesota contacted us originally in February of 2012. This client was audited on his 941's and we represented him on that case. Once the business was assessed 941 taxes, we told the customer that if he was very lucky maybe the three year clock would pass and he wouldn't be personally assessed (!).

When he contacted us again in the fall of 2015, we were glad to report that the Statute to collect the 941 tax against him had expired. The IRS agent assigned to his case conceded so. The client just paid off his most current taxes, dissolved his company, and essentially walked away from a quarter million dollars in payroll tax.

Not everyone will get this lucky. But if you do owe old 941 back taxes, it is an important consideration if you are one of the entities above (Sole props are the exception to this rule).

Washington Tax Services is approaching its 30th year of assisting tax problem clients. Call us at 1-888-282-4697 to discuss your 941 tax or other tax issue or EMAIL us a description of your tax issue HERE and we'll contact you. 

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