Discussion:IRS Collections

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Discussion Forum Index --> Advanced Tax Questions --> IRS Collections
Discussion Forum Index --> Tax Questions --> IRS Collections

Littlelulu (talk|edits) said:

28 September 2009

Could someone please confirm if the IRS cannot go after the officer/shareholder of a C Corp for taxes (not treasury funds) assessed as a result of an audit? The corp was dissolved prior to the beginning of the audit. I read in the IRS manual where the RO can code the account CNC, but want to know if legally, can they collect the tax from the shareholder.

Also, as a result of the audit, there will be taxes assessed against them personally. Couple is also 100% shareholder of S Corp. If they do not have the $ to pay taxes, am I correct in my thinking that the IRS can go after their interest in the S Corp?

Thank you for your help

Mscash (talk\|edits) said:	28 September 2009
If anyone, officer/shareholder/other got assets of the disolved corporation, IRS could pursue them for a transferee assessment under IRC 6901. Their ability to pay is legally irrelevant but should be mentioned if the issue comes up.

Littlelulu (talk\|edits) said:	28 September 2009
The corporation did not have any hard assets. The only asset they received was cash in the way of wages and dividends.

Mikex2e7n5 (talk\|edits) said:	5 October 2009
If it is employment taxes withheld from the employees, then they can be held liable under 6672, the Trust Fund Recovery Pentalty.

Death&Taxes (talk\|edits) said:	5 October 2009
She notes the money is not due 'for treasury funds' which I take to mean withholding tax. The question in my mind is whether IRS would have recourse to say the dividends should not have been paid.

Irsfixer (talk\|edits) said:	5 October 2009
The questioner made it somewhat clear he was not talking about employment taxes.

Death&Taxes (talk\|edits) said:	5 October 2009
To clarify that is what I meant, 'treasury funds' = withholding tax.

Kevinh5 (talk\|edits) said:	5 October 2009
I would think that disolution dividends paid would give rise to transferee assignment, as MsCash has written.

Littlelulu (talk|edits) said:

6 October 2009

Mscash,

Thank you for the code reference, I did read IRC 6901 and am concluding that the IRS may go after the shareholder because of the transfer of liability.

Can anyone chime in on the IRS's ability to go after an interest in an S-Corp during the collection of personal income tax?

Thank you all for your contributions.

Kevinh5 (talk\|edits) said:	6 October 2009
Lori, an IRS tax lien would technically attach to everything the taxpayer owns. They really just want the guy to pay up. They don't want to be in the repo business.