AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size.
I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, Your Money.
Education/Credentials BBA, Baylor University.
Awards and Honors IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 1/25/2008 Subject: Follow up to Business Tax Question
Question Sorry, we formed it under an S Corporation. Does this help?
I asked the following question (see below) of another expert and his reponse
was that the issue of buyout and forgiveness of debt would have
ramifications. Could you possibly elaborate on some of the ramifications. I
received a payout in addition, and filed it on my taxes last year as a sale of
business (asset). Can this also affect me personally?
Question I went into a retail business with 2 other people in April 2005.
In April 2006 I was told that there would be a mandatory buyout of my share
of the interest in the business (not by my choice and a little acrimonious). I
was released from all company debt as a condition of the
buyout and I confirmed this with vendors and the bank holding the business
loan. I was just made aware by one of the partners that the business has not
filed taxes since the beginning of the business in 2005. My question is: Am I
liable for any penalties and taxes due that may result from this delay in
filing? The partner stated that it was "no problem" since there was nothing
due, but I am concerned about the consequences of the non filing from a
penalty standpoint. Does the IRS care that I relinquished all claims and
responsibility in 2006 and cannot force them to file taxes? Can I force them
to file taxes to mitigate my responsibility? I am located in Georgia.
Thank You,
Liev
Answer Liev In my opinion yes the issue of buy out and forgiveness of
debt
has ramifications
Because I cannot answer without knowing what form of organization the
business was in.
Expert: Mike Wellman
Answer If it was a Sub S, they should have filed an 1120S and sent you a K-1 each year. If they did not, then you will have to amend your personal return to take into account any income or loss reflected on the K-1. You could owe more tax or even have a loss that results in a refund. You will only be liable for your share as it is reflected on the K-1.
The other possible tax is payroll tax. if you had employees and paid wages, then quarterly payroll reports were required. Money withheld from employees wages should have been paid to the IRS. If money was withheld but not paid, this could be a serious problem. They could hold some or all of you personally liable for these taxes. Who ultimately would be responsible is based on the facts and circumstances.
If the tax problem is payroll taxes, this forum will be of little use. You need to contact a professional with experience in this area. I can assist if you choose.
