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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 3375
Experience:  Over 20 Years experience
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I have a contract for the sale of my stock to a corporation

Customer Question

I have a contract for the sale of my stock to a corporation for a buy out. I received payment and the corporation deducted money out of the payment for taxes on money I was receiving. The corporation did record on their books a accounts payable for taxes for me. The corporation has stoped paying on the contract and will not pay moneys held from payments for taxes. I have filled my taxes and now have a large tax liability that I can not pay. I ended up owing taxes on the full amount of payment I received and even the moneys the corporation held back for taxes. Do I have any recource in getting the tax money and would the state and federal tax collectors have any help for me in getting their money? The moneys held for taxes is over $20,000.00.
Submitted: 5 years ago.
Category: Tax
Expert:  R. Klein, EA replied 5 years ago.

On your tax return, you should indicate the amount of tax withheld from your payments.

A company that withholds taxes on your behalf is REQUIRED to make those payments to the IRS. If the company does not make the payments to the IRS, not only is the corporation going to have to answer to the IRS, but the officer's of the corporation can be held personally liable.

Make sure you have proof that the corporation withheld taxes from the payments they actually gave you.

As to the issue of the non-payment to you for monies owed for the stock purchase itself, this is a civil matter which you will need an attorney to fight. The IRS will not get involved in a collections matter. They are only interested in taxes withheld and not sent to the IRS.

R. Klein, EA and 5 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

I did review your answers and I do have proof that moneys was being witheld from my payments for the stock purchase for taxes. My next question is how and who do I contact in the IRS and state of Nebraska to move this along. I am trying to get my payments for stock purchase with help of attorney.

I was happy with the prompt and strait answer to my question.

Expert:  R. Klein, EA replied 5 years ago.

Well, you certainly want to claim on your tax return if you paid it.

Basically, at this early stage, you need to simply do your tax return. You don't know for sure if the company remitted the money to the IRS or not. Since their company business is not for you to go into, it becomes a private matter between the IRS and the company.

If there is any issue with the missing tax deposits, the IRS will not know for 18-24 months. At that time they will contact you and ask for your proof. If you are able to substantiate your side, then they will investigate the other party.

There really is no way to contact the IRS in advance, since you have no proof of the company's non-compliance, and the IRS really doesn't care about it right now. It is critical you keep the proof for at least 3-4 years.

If I have resolved your issue, kindly press the Accept button to close out the question. Thanks!

Customer: replied 5 years ago.

I do appologize for for not giving specific dates. The taxes were withheld by the corporation for the 2009 and and first quarter of 2010 tax years. I do have E-Mail from owner of corporation on September 16,2010 stating he will not pay taxes whithheld to me and will use money to pay other bills.

I have filled my taxes every year on time but was not able to pay tax owed for 2010. The IRS and state of Nebraska are now levying my wifes paycheck and puting levy on my home, I do not have 3 to 4 years.

Expert:  R. Klein, EA replied 5 years ago.

Did you report the withholdings on your 2009 and 2010 returns?

You need to hire a tax professional to stop the levy. I cannot do that myself through this forum. This is an issue where you need to seek a local professional as soon as possible.