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We have a family-owned LLC, which files federal taxes as a partnership. It is broke and going out of business as soon as the last tax return is filed --- probably this week. Due to late filings, we are being penalized --- about $750 each for '05 and '6; there will be mote for '07 and perhaps '08. We can't file for an abatement, as we have no legitimate reason for being late. The structure of the LLC is that 3 individuals (all are my adult children) own 1/3 each, and the LLC is managed by a corporation, not by the members. The corporation is run by one of my daughters and owned by the other. The corporation is equally broke and will be out of business in a few days. What alternatives does the IRS have to go after anyone to collect the penalty? What are you suggestions?
Hello vegasrunner, If the LLC owes penalties due to late filings, the IRS can pursue collection activities from any or all of the LLC owners. While the personal assets of the owners may be protected from business debts owed by the LLC, this never applies in the case where taxes are due. If the LLC closes its business operations, and the IRS cannot collect directly from the LLC assets, it would then send notices of the tax due to the 3 owners. If the amount due was not paid, they can place liens and/or levies on any of the personal assets of the 3 owners until the debt has been satisifed. This would include placing levies on their bank accounts, wages from employment or any property that they own. Under the circumstances, there really are no suggestions that anyone can give you other than to pay the penalties which are due, as the IRS has a full 10 years to pursue the collection of this debt. I am sorry I could not give you better news on this situation, but unfortunately this is just yet another example of the power that the IRS truly yields over all of us. If this was helpful please press the Accept button. Thank you vegas, and let me know if you have more questions. I am happy to help you with whatever I can.
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad
Thank you for the quick response.
Thank you vegas. Wish I could have given you some other choices here, but there just really are none when it comes to paying the tax man.