Can civil penalities be assessed against a single member LLC. The penalities have been assessed for several years prior to 01/01/2009. The IRS position is that since the penalties have been assessed for years prior to 2009 the single member is personably responsible.Please provide IRC or other references to support your answer
Country relating to Question: United States
U>S Tax guide; IRS audit manual; IRS site
Thank you for using Just Answer. If you require clarification, please feel free to post a follow up question.The IRS does not recognize a single member LLC as distinct from the sole member. Therefore, any tax liability would be against the member. In fact, the single member LLC does not file its own federal return, but is filed under the sole member's ss#.
Would a personal bankruptcy filing eliminate the assessed IRS civil penalties?
As a general rule, the civil penalties are not dischargeable:The non dischargeability provision is found in 11 U.S.C. §523(a)(7). This section makes a civil penalty other than a tax penalty non dischargeable. That section provides that(a) A discharge under section 727, 1141, 1228(a), 1228(B), or 1328(b) of this title does not discharge an individual debtor from any debt–......l... (7) to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty– (A) relating to a tax of a kind not specified in paragraph (1) of this subsection; or (B) imposed with respect to a transaction or event that occurred before three years before the date of the filing of the petition;
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