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PDtax
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1870
Experience:  32 years tax experience, including four years at a Big 4 firm.
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Why would my IRS transcripts have shown a employment tax balance

Resolved Question:

Why would my IRS transcripts have shown a employment tax balance due -then apprx 1 year later- with no activity by me- meaning no payments or contact from the IRS- the balance now shows zero? What's that all about?
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.

hi from just answer.

 

My first guess is it was a mistake. Error in typing in your social security or EIN, then adding assessment. Your question didn't add a lot of detail, so keep that in mind.

 

Secondly, it sounds like a trust fund assessment could have been made against you, then removed/reclassed when either someone else was found liable or the taxes were paid, removing the need for the assessment.

 

If this covers your question, please click Accept. If you can provide more facts, such as did you own this business, type of taxes/periods, did you have employees, etc., that would help be more accurate.

Customer: replied 2 years ago.
This was from not with holding employment taxes and there was definitely an IRS assessment under my-ein/ss#. This has been very longstanding with a possible currently not collectable decision by the IRS on this and personal tax debt. i am negotiating with a Revenue Officer- but I am afraid to ask him.
Any opinion? Just a bunch of zeros.
Customer: replied 2 years ago.
Would they just take it off the books? and if so- w/o any notice to me?
Expert:  PDtax replied 2 years ago.
yes, if it was an error. also, if they thought it was a responsible party assessment and never properly reviewed your case.

Do you know what it was for? That would help.
Customer: replied 2 years ago.
I owned a business and did not withhold FICA ect. I don't know what a responsible party assessment is.
When you say- "yes-if it was an error"- do you mean an error in the assessment in the 1st place- or just an error in removing a legitimate debt? Properly reviewed?
I am asking as I am about to file Chapter 7 which will discharge my personal tax debt-but not the payroll-employment debt-and it would pretty good if for some reason that went away.
Expert:  PDtax replied 2 years ago.
You initially didn't give a lot of info, so I had to suggest a few things. An example of a 'responsible party assessment' would be the company controller, who made the fed tax deposits but didn't make some, could be liable as a responsible party.

Chapter 7 will discharge taxes more than three years old, and you are correct about the employment taxes, but only the trust fund portion (withheld from employee paychecks) would survive the filing.

Now I see what the problem is. The good thing is IRS will probably not assess for taxes after your Chapter 7. It's not likely they will get anything. And, they must, by statute, make their claim for taxes due before the petition date, so the bankruptcy court has a chance to rule on their collectibility.

Don't forget to claim the periods of this phantom assessment on your petition, and you should be fine.

I'm not an attorney, but I do a lot of bankruptcy-related tax settlement, so I know the drill.

Thanks from Just Answer, and don't forget an Accept.
Customer: replied 2 years ago.
Ok- I have to spend a couple of minutes digesting this answer- BTW- great responses- but 1st let me ask this- Are you saying that if at the time I petition for chapter 7 protection they show no balance due for this tax then they cannot demand payment after the fact?
Expert:  PDtax replied 2 years ago.
Since I suggested specific mention of the tax assessment periods in question, they would be barred from re-claiming after the petition and proof of claim process, since they would be barred from doing so by bankruptcy statutes. It's the reason you specifically mention the assessment periods on your petition.

IRS can try to claim after the fact, but they will lose. I remember a case where New York State refused to accept a bankruptcy discharge I worked on, and levied on the spouse's income for the discharged taxes. We had to defend, but they quit on the courthouse steps, literally. They did not want to lose in bankruptcy court and have a published decision other taxpayers could use as precedent.

Customer: replied 2 years ago.
I have another question about this---- Within the way that Just Answer works-if after accept an answer am I able to contact you directly- within Just Answer- about this issue- w/o having to just have to put that this out there again for anyone to try to jump in and answer-- as I have to put my attn on something else for several hours but don't want to lose you- can we put this on hold i am definitely not going to abandon you-as a matter of fact you have earned a ip already- please let me know.
Expert:  PDtax replied 2 years ago.
You can accept and just ask for me when you wish.
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 1870
Experience: 32 years tax experience, including four years at a Big 4 firm.
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