Advice needed: Defunct S Corp

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LDE

Advice needed: Defunct S Corp

Postby LDE » Tue Jun 07, 2011 12:01 am

Perhaps just a referral to someone in the Austin area. Here's the situation.

I recently started dating (yay!) a woman with a personal-services business, "R." Her best friend "S" is also her housemate and business colleague. Their retail business, an S corporation, failed about two years ago. "R," as I understand it, was not an owner or partner of this S corp (are they always sole proprietorships?); "S" is fully responsible. The business was dissolved with the aid of an accountant. Now "S," who has essentially no money to deal with the issue, has received an IRS letter stating that a form was not timely filed and "S" owes around $5,000 in penalties. The accountant dropped dead of a heart attack about two weeks ago, just before "S" received the letter so even if the accountant is at fault, it may be very difficult to reconstruct the paperwork because his heirs don't necessarily have a handle on his business (the death was unexpected). I guess "S" needs an enrolled agent? Any advice welcome here.

jg
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Re: Advice needed: Defunct S Corp

Postby jg » Tue Jun 07, 2011 12:15 am

Indeed, you (or the representative) should present all of the facts to an experienced practitioner to respond to the proposed penalty.

The first step usually will be to determine if there was indeed a lapse in any filing requirement or not. Later, argument can be presented to dispute the presumption there was a lapse and penalty is due, and perhaps a request can be made for waiver or other action (such as showing the noncollectibility from the defunct corporation) can be pursued.

See https://portal.naeacentral.org/webporta ... earch.aspx? at the National Association of Enrolled Agents (NAEA) site where you can search by location for an enrolled agent.

If a respnse to the notice of proposed penalty has not already been made it may be important to make contact even if only to inform that a representative is being sought and repsonse is being prepared. In some cases automated collection will begin when no response is made within the time frame stated in the notice.

Best wishes in resolving the issue.
“Where there is an income tax, the just man will pay more and the unjust less on the same amount of income.” — Plato

Judge Roy Bean
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Re: Advice needed: Defunct S Corp

Postby Judge Roy Bean » Tue Jun 07, 2011 5:10 am

LDE wrote:Perhaps just a referral to someone in the Austin area. Here's the situation.
... The accountant dropped dead of a heart attack about two weeks ago, just before "S" received the letter so even if the accountant is at fault, it may be very difficult to reconstruct the paperwork because his heirs don't necessarily have a handle on his business (the death was unexpected). I guess "S" needs an enrolled agent? Any advice welcome here.


The issue isn't his heirs. The issue is the professional entity he operated and whether or not it was insured against errors and omissions.

JMHO.
The Honorable Judge Roy Bean
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