Just recieved a letter from IRS. "Our records indicate that you have filed Form w-2 for these periods, but you have not filed employment tax returns for these tax periods. Based on this information , we believe that you should have filed employment tax returns for theese tax periods" The letter is accurate my LLC did file the w-2 but did not pay the taxes or file the employment tax returns. I estimate my LLC will owe aboit $94000 which I do not have. What is best thing to do? Am I at all protected because of LLC status? Will they allow payment plan?
State/Country relating to Question: New Jersey
Unfortunately I do not I have good news.These funds that are due are not the LLC's funds, these are the employees' funds as it is their share of federal and state taxes as well as the LLC's share.
The best thing that you can do is to file all your payroll tax returns for the period in question and pay the payroll taxes due immediately. If the portion of the payroll taxes representing the employees' federal income, FICA Social Security or Medicare taxes are not withheld, not deposited or not paid to the United States Treasury, responsible persons may be held personally liable for the taxes if the "trust fund recovery penalty" applies. The trust fund recovery penalty is equal to 100 percent of the taxes that were withheld from employees (the "trust fund taxes"). The trust fund recovery penalty applies jointly and severally to all persons who are determined to be responsible for collecting, accounting for, and paying over the trust fund taxes, and acted willfully in not doing so. A "responsible person" can be an employee, an officer of a corporation, a partner of a partnership, an accountant, a volunteer director/trustee or a sole proprietor. Essentially, a "responsible person" may be someone who signs checks for the employer or otherwise has the authority to cause the spending of business funds. "Willfully" means voluntarily, consciously and intentionally. A responsible person acts willfully if the trust fund taxes are not paid and any other creditor is paid.
There may be several responsible persons, but any of them can be held liable for the entire amount of the trust fund taxes. Once the trust fund recovery penalty is assessed, the government may use all collection methods to collect, including levying on bank and brokerage accounts and garnishing wages. In addition, the liability for trust fund taxes is not dischargable in bankruptcy.
If you are a "responsible official" you are not protected because of "LLC" status. You may be eligible for an "offer in compromise" or an "installment agreement". I would advise you to contact an attorney to get appropriate legal counsel. This is a very bad situation to be in as the IRS does not have any leniency in this department. See the link below from the IRS:
Sorry to be the bearer of bad news, let me know if you have any further questions.
US Taxation specialist.