A recent phone call from an old client of ours perfectly illustrates the rules relating to corporations and payroll taxes. Back in 2008, we filed the Power of Attorney for his business while providing guidance on what appeared to be an unpaid 941 liability totaling $300,000 (!). Our recommendation at the time was to close the corporation and run out of the three year clock, i.e., the IRS might miss the three year statute to assess the taxes personally against the company owners.
It's now 2012. Yesterday, an IRS agent called us out of the blue to pursue this debt. It's pretty clear to us that the IRS missed its chance to collect, and it looks like it will go to the grave with the corporation.
This is one of the beauties of incorporating. Nobody plans for failure, but if you have a high payroll type of business it's best to incorporate. If you fall behind on 941 taxes, you can potentially avoid personal assessment of the taxes and at the worst, the IRS can assess the trust fund or 45% or 50% of the taxes against you personally as long as that assessment is within a 3 year period.
If the business owner had been a sole proprietor, chances are the debt would have lasted 10 years on his record and would have been fully assessed against him. That's quite a financial albatross.
Have unpaid 941 taxes? Call us at 1-888-282-4697 or email us a description of your tax problem and we'll contact you!