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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 38364
Experience:  Run my own successful business/contract law practice.
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My husband is involved in a family business with his father

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My husband is involved in a family business with his father (owner) and brother. He recently found out his brother has been paying personal and home bills with company checks. He has uncovered over $10000 in personal payouts by his brother. He has told his father who really doesn't seem to care. The company could face potential bankrupcy if this continues. Is there any legal moves he could take even though he is not a direct owner of the company? Where does the IRS fit into all of this?
Submitted: 4 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 4 years ago.
What exactly does your husband do for the business--is he an investor or silent partner?
Customer: replied 4 years ago.
It is a funeral home and he is a manager of sort. He is currently paying his father to buyout the business but does Not own stock in it yet.
Expert:  Dimitry K., Esq. replied 4 years ago.
If he does not own any part of the business, about the only thing he can do is contact the IRS and have them audit the books. Otherwise, he may demand a third-party audit as a possible future owner, and request it under due diligence.

Sincerely,

Dimitry Alexander Kaplun, Esq.
Customer: replied 4 years ago.
would the IRS go after the company or his brother?
Expert:  Dimitry K., Esq. replied 4 years ago.
The IRS will probably go after if the brother is an officer of the company (president, treasurer, chief executive, etc..). Otherwise the IRS will only go after the company, but the company will be able to bring criminal charges and a civil suit against the brother for any damages he caused to the business.

Sincerely,

Dimitry Alexander Kaplun, Esq.
Customer: replied 4 years ago.
When you say the company, do you mean the owner- my father in law? If his son is embezzling money, why would the IRS go after him? If my bro in law isn't reporting the extra income he's using to pay bills, how is he off the hook with the IRS?
Expert:  Dimitry K., Esq. replied 4 years ago.
I mean the company itself, not the owner, although depending on the business structure it may be th father-in-law. What type of a business entity is this?
Customer: replied 4 years ago.
There are a couple different entities I believe... his father uses an LLC and the actual funeral home is sole ownership. Does that help? All this to say, it makes it easier to steal money from the different business entities. My husband is suppose to finish buying out his father and be partner with his brother. I don't want any of this to eventually affect my husband with the IRS in the event of an audit. If this were reported to the IRS, I still don't understand why his brother would not be affected at all.
Expert:  Dimitry K., Esq. replied 4 years ago.
Actually that makes it a bit more confusing--under an LLC the company is held liable, while under a sole proprietorship, the business owner is held liable. This makes it very difficult for me to give you a correct answer.

The reason the brother may not be affected is that he can argue that he was the "agent" of the company and was merely following the orders of the boss. To make his liable, the company or owners of the company must sue him or charge him criminally with fraud and embezzlement.

Sincerely,

Dimitry Alexander Kaplun, Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 38364
Experience: Run my own successful business/contract law practice.
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