QUESTION
Can a 7.5 percent partner with no management be liable for back taxes of the company?
Asked on Dec 15th, 2010 on Taxation - California
More details to this question:
My son was listed on my now defunct company's 2002 & 2003 tax returns as a 7.5% partner. He had no management say whatsoever and no corporate title. Can the IRS hold him liable for unpaid payroll taxes and penalties?
2 ANSWERS
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If your son had check signing authority and did, in fact, sign some company checks, the IRS could argue that he was a "responsible official" and propose to assess the trust fund recovery penalty against him for part of the unpaid payroll taxes. (IRC 6672). However, you have a right to appeal IRS' proposed assessment against your son, and even take the case to the US District Court. However, you should retain a knowledgeable tax attorney to help you through the process.
Answered on Dec 16th, 2010 at 5:43 AM
Bruce Givner
If he was a general partner, the answer may well be "yes."
Answered on Dec 15th, 2010 at 5:43 PM