Wednesday, November 6, 2013

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!