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My wife & I have a partnership in a LLC that owes close to…

My wife & I have...
My wife & I have a partnership in a LLC that owes close to $5000 to the IRS - penalty for being late reporting for the tax year 2013. The LLC is dissolved, but I just got a notice from IRS of a Levy or property seizure within 30 days. I was in the understanding that a member or partnership of an LLC would not be persued by the IRS as such ? Can they levy or sieze in this case?
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Answered in 4 minutes by:
3/23/2018
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,044
Experience: Adjunct Professor
Verified

Hey! I'm Carter, I'm a CPA and can help you out with this.

The IRS would only be able to seize LLC property. There is none, so nothing can get levied.

But here's what you should do:

1. Write a letter requesting penalty abatement under Rev Proc 84-35. All you have to do is say you are requesting abatement under Rev Proc 84-35. The partnership only had two partners and all partners fully reported their share of income, deductions and credits of the partnership.

2. Call the IRS at the phone number on the letter and request a freeze on the account while they process the abatement request. Also notify them that the LLC has been closed.

Let me know if you need anything else. If not, please leave a rating. Thanks!

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Customer reply replied 1 month ago
I have a home, & Bank Accounts - can IRS go after either of them. Why did they send me a notice of intent to seize (Levy) your property or rights to property?? I already tried penalty abatement & Appeal Process- they did not agree.

Did you try the abatement under Rev Proc 84-35 or did you just try a reasonable cause request. They're two different ways for asking abatement.

No, they cannot go after your personal stuff for the LLC. The intent to levy is done through the automated collections, so a computer just shoots that out. You should call them and let them know the LLC is closed and they should close thecase as Currently Not Collectible - Defunct Entity.

Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,044
Experience: Adjunct Professor
Verified
Carter McBride and 87 other Tax Specialists are ready to help you
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Customer reply replied 1 month ago
I called IRS & told them LLC is dissolved, & to close the case. She said the partners of the partnership of LLC are still held responsible for paying amount owed & they would Persue collection, I said I talked to a lawyer & he said they can not touch personal property thru your partnership of an LLC. She said at the IRS that the Lawyer gave me bad information? I believe what you have told me but just giving more information as she says something different?

Check out the IRM on it:

https://www.irs.gov/irm/part5/irm_05-001-021#idm140628945126976

5.1.21.7.3 (01-12-2015)

Currently Not Collectible

SMO is single member owner.

  1. Identify the liable taxpayer as the SMO or LLC prior to reporting accounts currently not collectible (CNC). The collectibility determination must be made based on the assets and payment abilities of the liable taxpayer

5.1.21.14 (01-12-2015)

Identification of Liable Taxpayer

  1. For income tax purposes, the liable taxpayer is named in the assessment.

  2. For excise tax purposes, the liable taxpayer is named in the assessment. For liabilities imposed and actions required or permitted in periods beginning on or after January 1, 2008, the LLC is the taxpayer.

  3. For employment taxes on wages paid prior to January 1, 2009, the liable taxpayer may be the LLC or its owner, depending on the classification of the LLC for federal tax purposes. See IRM 5.1.21.4.1 for classification of an LLC after making an election. The classification of the LLC and identification of the taxpayer:

    • If the LLC is classified as an association taxable as a corporation, the LLC is the taxpayer.

    • If the LLC is classified as a partnership, the LLC is the taxpayer.

    • If the LLC is classified as a disregarded entity, the SMO is the taxpayer.

  4. For employment taxes on wages paid on or after January 1, 2009, the LLC is the taxpayer, regardless of its classification.

So for income tax purposes, the person liable is the person named in the assessment. Per the CNC part, "The collectibility determination must be made based on the assets and payment abilities of the liable taxpayer." The liable taxpayer is then the LLC, which does not have any assets.

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Carter McBride
Carter McBride, Certified Public Accountant (CPA)
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