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This is a tax question if your small business owes the IRS

Customer Question
over $10,000 and your business...
This is a tax question if your small business owes the IRS over $10,000 and your business fails what does the IRS do if you don't have the money to pay them?
Submitted: 5 months ago.Category: Tax
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Answered in 1 minute by:
6/25/2017
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 5 months ago
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,362
Experience: Certified Public Accountant
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Hi, my name is Mark. I will be happy to help you with your question. What type of entity is the business (corporation, LLC, S-Corporation)? What type of taxes are involved?

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Customer reply replied 5 months ago
S corp,
Payroll deductions
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 5 months ago

Payroll taxes are treated a little differently then other taxes. Payroll taxes are a trust fund tax. This means that the money was withheld in trust for the government. If it was a C-Corporation that owed income tax and the business failed then there would not be much that the IRS could do unless the corporation made transfers to shareholders. If this was the case the IRS could pursue the transfers to collect on the unpaid tax.

Back to the payroll taxes. If the taxes are unpaid the IRS will likely hold Form 4180 interview to determine who are the responsible parties. The IRS likely would impose a trust fund recovery penalty on individuals that are considered responsible parties.

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Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 5 months ago

It is possible to set up an installment agreement for the unpaid payroll taxes. A payment agreement can be spread over 6 years.

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Customer reply replied 5 months ago
I think my husband should call u is that ok? I have 2 free calls. What I info do u need before he calls?
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 5 months ago

Sure, that is not a problem. If he has the general information relating to the amount owed- for instance, the shareholders, who was responsible to pay the payroll tax, how much is owed etc.

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Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 5 months ago

I need to step away in about 30 minutes but I will be back later in the day.

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Mark Taylor
Mark Taylor
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