How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Dimitry K., Esq. Your Own Question
Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41221
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
Type Your Legal Question Here...
Dimitry K., Esq. is online now
A new question is answered every 9 seconds

I just sold my business back in april, in july I received a

This answer was rated:

I just sold my business back in april, in july I received a letter from the IRS stating one subcontractor I had hire to do web design filed himself as a employee, he was 1099 ed and submitted invoices for his work as an outside subcontractor, he had attempted this a year prior along with a labor board claim for unemployment, I fought those and won, but now he has a new case worker, she is claiming he now was both, because he is now claiming he did work related to my company. The tax bill is 400 dollars and the new owners just want to pay it and be done with it, but the IRS is saying we need a tax attorney to fill out the paper work. My question is, I no longer own the company, the corp is being dissolved, im assuming im still liable , but what are the statues concerning this sort of thing, and should I fight it again, not agreeing he is an employee, isn't that going to open a can of worms?

Thank you for your question. Please permit me to assist you with your concerns.

That is indeed a can a worms. If you admit that he was an employee, he can arguably refile for unemployment and attempt to receive it. This is something you may want to explain to the new owners, that if they took over this corporation, they may end up being liable for his unemployment benefits even if he was not an employee nor has he never worked a day for them directly. If the tax bill is purely based on 1099 work and is not opening p his claim into employment, it would indeed be cheaper to pay it and forget it, as that would not claim that he was an employee. The fact that you no longer own the company would mean that IRS would go after the new owners since they purchased the company along with all assets and debts. As for the tax attorney, I am afraid that is accurate as well--corporations are considered to be separate legal entities. Doing legal services for them is forbidden other than for attorneys since it would be potentially 'unauthorized practice of law'. While you can self-represent, you cannot represent a company. I do not see you being liable, however, the new entity is liable once they made the purchase and bought the assets and the debt.

Good luck.

Dimitry K., Esq. and 3 other Legal Specialists are ready to help you
Customer: replied 4 years ago.

im pretty sure the tax bill is for tax's that should of been paid as an employee, he never paid any tax's on the income he earned, which was small, 3700 dollars.

either way, if im not liable any longer, im good, the new owners have taken it upon themselves to address this against my advice, I just want to be sure im not on the hook


Thank you for your follow-up. To put it in perspective, the company is on the hook, not you. When they purchased the business, the got all of the company's assets AND debts and obligations. This is an obligation the company needs to pursue. If they are wanting you to pay it, THEY will deal with the fallout and the consequences from the IRS, as it would no longer be your liability or your responsibility.

Good luck.

Customer: replied 4 years ago.

even if they changed the name of the corp, after they bought the business?


Thank you for your follow-up. If they are still keeping the old EIN, then it is still legally the same business, even if the name has changed. What governs is the EIN (essentially the SSN of the business), and that is what truly follows the business around from location to location and is utilized for identification and tax reporting purposes.

Good luck.