Have a Tax Question? Ask a Tax Expert
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I am sorry to hear about your problem. Is there any way that you can get copies of the bank statements directly from the bank? That would be a start!
Your situation is not unheard of. Many companies suffer disasters or other problems that prevent them from getting their records, or their records have been destroyed. The IRS allows you to reconstruct your records to the best of your ability when you have a situation such as yours. According to the IRS' publications, you can do the following:
Record Reconstruction - Business
All of these methods will help you in preparing a tax return that can be filed with the IRS. You do have to disclose that the return was prepared with reconstructed records. As officers of the corporation, you and the president's wife both have an obligation to report the income and file the tax returns to the best of your ability.
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If the owner and president is withholding the information, doesn't he have the responsibility to report the taxes?
Please help me to understand the situation from the IRS side of things. He is the owner and I am a volunteer treasurer (he never paid me for my work!) He has the records and is not giving access.
Is it possible to find out if he has already filed? Or is it possible to serve him notice of the need to file, thereby releasing me or his wife of any obligation?
Both his wife and I live in different countries and it is very difficult to get any information, especially when he has closed all the accounts.
Again, thank you for helping me to understand a difficult situation.
Further, the “responsible party” is defined as follows:
For entities with shares or interests traded on a public exchange, or which are registered with the Securities and Exchange Commission, “responsible party” is (a) the principal officer, if the business is a corporation, (b) a general partner, if a partnership, (c) the owner of an entity that is disregarded as separate from its owner (disregarded entities owned by a corporation enter the corporation’s name and EIN), or (d) a grantor, owner, or trustor if a trust.
For all other entities, “responsible party” is the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. The ability to fund the entity or the entitlement to the property of the entity alone, however, without any corresponding authority to control, manage, or direct the entity (such as in the case of a minor child beneficiary), does not cause the individual to be a responsible party.
A “nominee” is someone who is given limited authority to act on behalf of an entity, usually for a limited period of time, and usually during the formation of the entity. The “principal officer, general partner,” etc., as defined by the IRS, is the true “responsible party” for the entity, instead of a nominee. The “responsible party” is the individual or entity that controls, manages, or directs the entity and the disposition of the entity’s funds and assets, unlike a nominee, who is given little or no authority over the entity’s assets.
If you were a volunteer, and had little control over the entity, I believe you could be considered a nominee, and not a responsible party. Likewise, as the wife was given authority for a limited period of time while the company's president was in rehab.
So, while initially the IRS might look to you and the wife for the reporting, I believe you could be released from any issues by proving the facts as you have laid them out here. This would show that you were not the responsible party.
As an officer of the corporation, you can call the IRS and find out if the corporation has filed its tax return. You would need the Federal Employer ID number (FEIN), but as treasurer, I am sure you have this. The number for general customer service is 1-800-829-1040.
I hope this answers your questions! If you have any more, please feel free to ask!