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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91275
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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Dear Sir or Madam, Im thinking about lending my sister some

Resolved Question:

Dear Sir or Madam, I’m thinking about lending my sister some money and help organize her brand new magazine business that she is going to start real soon. But I have one problem, I owe a lot of taxes to the government and I would like for my name to be on the LLC application article of organization. I've talked with the people at Secretary of the State of North Carolina, they said the article has nothing to do with ownership, they said it’s mainly how the entity is registered. But they also said if my name is XXXXX XXXXX the registration, it will be registered as such. Could this mean that anything the business makes or loose it’s on me as well and can the government come after her business because I owe taxes, because I’m on the LLC as a member or organizer? Should she just hire me as an employee and in that way she my not have to worry about my personal tax situation. I would really like to be apart of her business, but not as an owner, for tax purpose. I’m paying back tax now and I’m on a payment plan. Should I go on the LLC article of organization, or should she just make me an employee?
Submitted: 2 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 2 years ago.
The government cannot come after her for personal income taxes you owe, BUT they could seize your share of any profits from the LLC in which you are a member. Thus, if you are listed as a 50% owner, they can seize your share of any proceeds from the LLC up to 50% of the LLC profits. If she hires you as an employee or even independent contractor, the government can issue a garnishment order, meaning she would have to pay any money she owes you for your work to the government up to 25% of your income after taxes. Also, if you have a loan agreement, the IRS can seize any payments due to you on that loan to satisfy your tax debt.

Overall, having them garnish up to 25% of your pay from being an employee is paying them less than them seizing up to your full share of proceeds from the LLC.


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Customer: replied 2 years ago.

I think I got that part, except for the details of percentages, but my main question, although it don't say I'm the owner on any part of the LLC article application ( cause it states members or organizer). Am i still considered an owner, even though I'm on the LLC article application as an organizer?

Expert:  Law Educator, Esq. replied 2 years ago.
Someone can incorporate an entity and not be considered an owner. Thus, just because you are listed as an organizer, does not legally translate into you being an actual member of the LLC and this would be stated in the articles of organization and the annual report listing officers and members.
Customer: replied 2 years ago.

I'm sorry Mr Paul, but I think you miss my whole concern.

If i'm listed as the organizer on the LLC , would that leave it open for the tax man to come after the company because i'm on the article LLC as organizer, and I owe back taxes and I'm on a payment plan....... COULD I PUT MY SISTER COMPANY IN JEPARDY, BECAUSE I'M ON THE ARTICLE AS ORGANIZER?

Expert:  Law Educator, Esq. replied 2 years ago.
I apologize for perhaps not getting the whole situation here. No, it would not leave it open for the IRS to come after your sister or her company merely because you are an organizer, you would have to be a member of the LLC and as such the only jeopardy to the LLC would be the IRS could seek only YOUR SHARE of the proceeds in the LLC, not your sister's or not the whole LLC.
Customer: replied 2 years ago.

Okay i think we are getting somewhere here! Okay as it states on this form, The name & address of each person executing these articles of organization is as follows: ( State whether each person is excuting these articles of organization in the capacity of a MEMBER, ORGANIZER or both. Would I be safe as an Organizer, and my sister would still hire me as an employee, am I just leaving it open for the Tax man to come after my personal Tax and not the company business or could they still come after the company because my name is XXXXX XXXXX LLC as organizer. If this is answered, then there is know other question to be ask.

 

Thank you Mr Paul

Expert:  Law Educator, Esq. replied 2 years ago.
You can be just an organizer without being a member having an ownership interest in the LLC. Thus, you would be safe and the LLC would be safe with you only as an organizer of the LLC because that does not give you ownership interest for them to seize.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 91275
Experience: All corporate law, including non-profits and charitable fraternal organizations.
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