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I recently left employment for a company that closed it's…

Customer Question
Hello, I recently left...

Hello, I recently left employment for a company that closed it's doors. The owner of the company has not paid payroll taxes in months, but has withheld money from my check. I knew about him not paying taxes, do I have any responsibility for him not filing?

Accountant's Assistant: What state are you in? It matters because laws vary by location.

Utah

Accountant's Assistant: Has anything been filed or reported?

Not that I know of. I kept record of each of our employee's pay, and what their gross was vs what they were paid.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

Not at this time

Submitted: 1 month ago.Category: Tax
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Answered in 6 minutes by:
12/21/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,481
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My Lane’s Lane …

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986.

If you’ll please bear with me for a minute I’ll type up my initial response, and then we can go from there if you have further questions on this.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

IRS will say that the taxpayer is ultimately responsible for their own taxes (so the 1/2 of Social Security and Medicare IS your responsibility). The employer is CERTAINLY responsible for both not paying the other half and not paying in withheld amounts ... VERY serious, called the Trust Fund penalty, because of the virtual trust created when withholding from employees.

...

If you were a responsible person at the company, it's possible that you have some culpability, although your help in identifying the employer will certainly go a long way.

...

IRS has, in previous cases, said that those who had knowledge of the funds being used for other purposes (such as the company's other liabilities) can be considered willful.

...

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Customer reply replied 1 month ago
I submitted payroll hours and gave the info to my boss who then had me cut checks for the net amount. My check included. So I knew what he was doing. I also was told that he had until 12/31/2017 to file. The payroll company that we hired to report all our taxes said that he was giving us loans until my boss could fix his finances and report it.
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

Not sure I understand "he was giving us loans"

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

Regardless, they'll go after the employer first. In most of these cases someone such as yourself would only hear from them is he doesn't pay-up.

...

But you likely DON'T fall into the responsible person category

...

Under Sec. 6671(b), a responsible person “includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty” to pay over taxes withheld.

...

Courts have generally understood responsible person status to depend on the individual’s control over corporate payments. Specifically, could the individual influence the decision to pay other creditors before the IRS?

...

The IRS considers many factors in making this determination, including the individual’s duties, corporate status, signature authority over the business’s accounts, and ability to hire and fire employees.

...

As with all issues like this IRS will say its a total facts and circumstances test ... the determination rests on the facts and circumstances of each case.

...

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

Once the IRS determines that the individual is a responsible person, the next step is to determine whether the individual was “willful” in failing to pay the taxes to the IRS. For these purposes, willful means that the responsible person chose to pay other creditors instead of the IRS.

...

Once an individual has been deemed responsible, it's hard to prove no willfulness.

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating, using the stars on your screen, and then clicking “submit" (you may have to scroll up to see the stars, OR look to one side or the other if you’re on a device, such as a phone or tablet) – That’s the only way I’ll be credited for the work.

I hope you’ll rate me based on my accuracy and thoroughness (as opposed to any good news/bad news content). Thank you!

..

But again, if you need more on this, or if I've not understood your question correctly, please let me know.

Lane

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Customer reply replied 1 month ago
Thank you for your help. I'll reach out to my former employer
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 1 month ago

You're very welcome ... Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …is thanks enough!

That's the only way I'll be compensated by JustAnswer for the work here

...

Thank you,

Lane

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,481
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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