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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4046
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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My partner and his best friend are partners in an S-corp....It

Resolved Question:

My partner and his best friend are partners in an S-corp....It is a general contracting business and they have not filed any sort of taxes for the past four years..can you give me a general idea of what sort of financial obligation they will have if they get on board and try to get caught up...
Submitted: 2 years ago.
Category: Tax
Expert:  Stephen G. replied 2 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

It would be difficult to do that without knowing if they made money and I presume they haven't filed personal returns either?

Customer:

Hi Stephen I would appreciate any infromation you can give me

Customer:

I have begun there book keeping and see that there will probably be a loss at the end of 2011...

Customer:

they do not pay thereself a pay check but instead it appears to me they just split the net profit at the end of each week and take it as cash

Stephen E. Grizey :

There are penalties just for not filing the S-Corp returns even though those returns don't result in any tax due with them; just what is due with the personal returns.

Customer:

they have not filed business or personal income tax for the last 4 years

Customer:

what are the penalties

Stephen E. Grizey :

Well, let's put it this way, if they are taking money out of the S-Corp, based upon what they think the profit has been for the week, they will have some serious penalties to pay personally;

Customer:

so they will be penalized and charged interest on there scorp for not filing and then be charged penalties and interest on there personal income?

Customer:

are they required to pay thereselves a standard or resonable pay each week with txts withheld

Customer:

and are these txs to be reported quarterly with the irs

Stephen E. Grizey :

The penalty for failure to file is 5% of the tax due for each month overdue to a maximum of 25%; failure to pay is 1/2 of 1% a month to a maximum of 25%, plus interest at varying rates until paid; those are the civil penalties on the personal returns;

Stephen E. Grizey :

If you are dealing with 4 years, there most likely are notices that have been ignored; which doesn't help matters;

Stephen E. Grizey :

You also have similar penalties for the state returns.

Stephen E. Grizey :

What were they thinking? Do they have any plausible reasons for not filing tax returns?

Customer:

I havent found any notices but that is not to say they havent been filed i out going...I am just trying to figure out how to aproach him to let him know he needs to disolve and get this under control....I am under the impression that his net bill to the gov..will be in no less then in the 10s of thousands.

Stephen E. Grizey :

Well, let's put it this way; I wouldn't marry him.

Customer:

nope

Customer:

they are just trying to make ends meet

Customer:

I have no plans to

Customer:

would it be a reasonable assumption to suggest that they liqufy this corp

Stephen E. Grizey :

That kind of money makes for giant problems; there are criminal penalties that could be assessed both the $ kind, which do happen quite often and worse, as I'm sure you can imagine.

Customer:

ok so I think I get the gist

Customer:

so even if they can get a fabulous accountant that is good with numbers

Customer:

they are still in major hot water for not filing

Stephen E. Grizey :

You will need professional assistance with this; the sooner the better; get hooked up with a CPA ASAP

Customer:

ok I will suggest that to him

Customer:

I appreciate your time

Customer:

should they retreive a tx lawyer

Stephen E. Grizey :

Don't even think of attempting this on your own; you can help the CPA get the numbers together, but the CPA will be able to make a judgment when or if it is necessary to seek legal assistance; probably won't need a tax lawyer, the CPA can handle most of that; at some point, they may need an attorney;

Customer:

ok so that is my goal

Stephen E. Grizey :

But it could be to keep them in the civil arena;

Stephen E. Grizey :

Just tell him without a CPA, you aren't helping

Customer:

I had no intention of doing any more then helping with the book work

Customer:

but the more researched the more i think this is hopeless

Stephen E. Grizey :

Don't get yourself involved without professional assistance or you could wind up part of the problem rather than the solution

Customer:

I am just trying to get ammo at this point in black and white to proove to him that something needs to be done

Stephen E. Grizey :

It isn't hopeless unless nothing is done;

Customer:

this type of lifestyle will get him nowhere

Stephen E. Grizey :

love is blind but there is a limit when you have to question judgment;

Customer:

I comepletely concur

Stephen E. Grizey :

it can have a lot of ramifications beyond taxes

Customer:

I hear ya

Stephen E. Grizey :

how old are these guys?

Customer:

42

Stephen E. Grizey :

Oh no, not good

Customer:

with no reportable income or retirement plan

Stephen E. Grizey :

old enough to know better

Customer:

I am a hairdresser working two jobs in two states and trying to save save save

Stephen E. Grizey :

what were they doing before this?

Customer:

fiber optics

Stephen E. Grizey :

as employees?

Customer:

his wife took him for a ride in the divorce and he has had the f',;'., it attitude

Stephen E. Grizey :

I get it

Customer:

yes he was an emloyee for a large comp

Customer:

so now I am dealing with trying to get the puzzle back together

Customer:

he has promise

Stephen E. Grizey :

Better find yourself a new boyfriend before you become victim #2

Customer:

it just depends on if he can give up this sensless life style

Customer:

lol

Customer:

he was the victim

Stephen E. Grizey :

You came here to me, so I'm looking at things from your standpoint too

Customer:

trust me

Customer:

thank you

Customer:

I am totally capable and level headed

Stephen E. Grizey :

We all have been victims of one sort or another

Customer:

will not give nor lend

Customer:

will not marry

Stephen E. Grizey :

that attitude (his) only leads to disaster

Stephen E. Grizey :

for him & everything around him

Customer:

but will take care of myself and depend on no one

Stephen E. Grizey :

just get him to a CPA or let him deal with it himself

Customer:

you are very right

Stephen E. Grizey :

good luck, he might become less attractive from jail

Customer:

I will give him this option....either you get serious or I will visit you in jail

Customer:

I am not going to waste my time if he does not intend on following thru with this situation

Customer:

and quite honestly I dont think he makes enough money to ever get caught up

Stephen E. Grizey :

really, why bother to visit; you can do better; you would be a real asset to the right guy

Customer:

lol

Customer:

thank you

Stephen E. Grizey :

good luck, I'm here if you need more help

Stephen E. Grizey :

just ask for steve G

Customer:

you have helped me considerably and confirmed my thoughts on this situation

Stephen E. Grizey :

Please remember to accept

Customer:

again thank you and have a great day

Stephen E. Grizey :

U@

Stephen E. Grizey :

2

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4046
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 4 other Tax Specialists are ready to help you

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