Accepted Answer

First of all - he needs to file all the unfiled tax returns. Normally statute does not apply on unfiled tax return and hence the Department can come after him at any time to recover the taxes.

Once the returns have been prepared and filed, he can work on a payment plan to make payment of the unpaid taxes.

Generally the corporation is a separate entity - able to own property, to sue and be sued in its own name. As a result, shareholder's liability is to the extent of their investment. However there have been cases in litigation where the sole shareholder has been held liable for unpaid and unfiled taxes.

Infact if he is a S Corp than the income taxes will be due on his personal tax return and hence he would be personally liable on the same in any case.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Expert:	RD
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Accepts:
Answered:	11/4/2009

Certified Public Accountant (CPA)

CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..