Quickbooks withholds zero federal tax

[webhick]

Yes i hear you on the "in writing" bit, but thing is we are friends somewhat, treading a fine line here.

All you have to do is ask him to email you some of the links that he is reading, wait a day or two after getting the email and reply advising him against following the advice within those links. He probably won't think anything of it and you'll get what you need in writing.

[Gregg]

And there is always the chance that when he gets in real trouble he'll come to you to get him out and you can rack up big fees to do it!!!

[lorne]

No I won't be signing his returns until I can bring him around. Today we had a nice little chat or negotiation as it were. Told him of the dangerous path he was on, yada, yada - that I will put my objections in writing unless... No problem, he says, just read the books to see where Im coming from. Well I agreed to read one of them just to be charitable.

thanks, Lorne

[LOBO]

So you're saying both he and employees (who did nothing wrong) will be in hot water - employees get interest & penalties for underwithholding, and same for him with possible crim. charges added like Richard Simkanin. I will look him up.

I don't know if you're reading the other threads, but Simkanin has his own thread with a link in the third or fourth post that gives a little basic information on the original charges.

[Gregg]

No I won't be signing his returns until I can bring him around. Today we had a nice little chat or negotiation as it were. Told him of the dangerous path he was on, yada, yada - that I will put my objections in writing unless... No problem, he says, just read the books to see where Im coming from. Well I agreed to read one of them just to be charitable.

thanks, Lorne

Taking one for the team?

[Cathulhu]

No I won't be signing his returns until I can bring him around. Today we had a nice little chat or negotiation as it were. Told him of the dangerous path he was on, yada, yada - that I will put my objections in writing unless... No problem, he says, just read the books to see where Im coming from. Well I agreed to read one of them just to be charitable.

thanks, Lorne

Taking one for the team?

Guess he can't close his eyes and think of England, or whatever, unless it's an audiobook.

[Lorax]

If you've already sent him this link:

http://tpgurus.wikidot.com/peter-hendrickson

and he's still not persuaded there's absolutely nothing you can do. I remember reading an article in the NY Times last year about a scientific study that found that once people really believe something strongly, even if it's demonstrably wrong, trying to convince them they're wrong actually makes them believe it more fervently.

[lorne]

Yes Ive sent him that link and several others. Tells me they are part of controlled opposition or something. Im not ready to call him crazy, not like the Simkanin guy anyway, not with all that he's accomplished in life.
Im open-minded yet skeptical. I've started on the shorter book, doesn't look as amateurish as the other one.

thanks
PS. This came in my inbox, what is the significance?

"Very superstitious, Writing on the wall
Very superstitious, Ladder's 'bout to fall

When you believe in things that you don't understand
Then you suffer, superstition ain't the way

Very superstitious, nothing more to say
Very superstitious, devil's on his way
13 month old baby, broke that looking glass
Seven years of bad luck, good things in the past

When you believe in things that you don't understand
You will suffer, superstition ain't the way
No, no, no, no"

[webhick]

PS. This came in my inbox, what is the significance?

"Very superstitious, Writing on the wall
Very superstitious, Ladder's 'bout to fall

When you believe in things that you don't understand
Then you suffer, superstition ain't the way

Very superstitious, nothing more to say
Very superstitious, devil's on his way
13 month old baby, broke that looking glass
Seven years of bad luck, good things in the past

When you believe in things that you don't understand
You will suffer, superstition ain't the way
No, no, no, no"

Something tells me that Harvester sent it. If so, just roll your eyes and delete it.

[grixit]

"Very superstitious, Writing on the wall
Very superstitious, Ladder's 'bout to fall

When you believe in things that you don't understand
Then you suffer, superstition ain't the way

Very superstitious, nothing more to say
Very superstitious, devil's on his way
13 month old baby, broke that looking glass
Seven years of bad luck, good things in the past

When you believe in things that you don't understand
You will suffer, superstition ain't the way
No, no, no, no"

That's part of the lyrics to "Superstition" by Stevie Wonder.

[LOBO]

thanks
PS. This came in my inbox, what is the significance?

Your client is delving in superstition?

[lorne]

Well it looks like I'll be losing this client. Says he plans to fold the company (an S-Corp) June 30 and re-open July 1 doing the same business. Says he was duped into signing up for the corporation. But he's not blaming me (too much) and will pay all taxes due for the corp.

[Gregg]

Well it looks like I'll be losing this client. Says he plans to fold the company (an S-Corp) June 30 and re-open July 1 doing the same business. Says he was duped into signing up for the corporation. But he's not blaming me (too much) and will pay all taxes due for the corp.

Hey, tell him to tell pete 'Hi there" for all of us when he see him!

[LOBO]

Well it looks like I'll be losing this client. Says he plans to fold the company (an S-Corp) June 30 and re-open July 1 doing the same business. Says he was duped into signing up for the corporation. But he's not blaming me (too much) and will pay all taxes due for the corp.

If you have a way of contacting his employees, I'd advise them to make estimated payments if he still refuses to withhold for them. Like I said earlier, it will save them headaches later, and he will be the only one taking the fall once this all catches up to him.

[Famspear]

Well it looks like I'll be losing this client. Says he plans to fold the company (an S-Corp) June 30 and re-open July 1 doing the same business. Says he was duped into signing up for the corporation. But he's not blaming me (too much) and will pay all taxes due for the corp.

If you have a way of contacting his employees, I'd advise them to make estimated payments if he still refuses to withhold for them. Like I said earlier, it will save them headaches later, and he will be the only one taking the fall once this all catches up to him.

I don't know that Lorne can legally do that without permission from the client. Internal Revenue Code section 7216 could very well apply -- making it a criminal offense to even discuss this with the employees without permission. Subsection (a) of section 7216 provides:

(a) Any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns of the tax imposed by chapter 1, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly—

(1) discloses any information furnished to him for, or in connection with, the preparation of any such return, or

(2) uses any such information for any purpose other than to prepare, or assist in preparing, any such return,

shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, together with the costs of prosecution.

--from 26 USC sec. 7216 (emphasis added).

There are exception to that rule in subsection (b):

(b) Exceptions

(1) Disclosure

Subsection (a) shall not apply to a disclosure of information if such disclosure is made—

(A) pursuant to any other provision of this title, or

(B) pursuant to an order of a court.

(2) Use

Subsection (a) shall not apply to the use of information in the preparation of, or in connection with the preparation of, State and local tax returns and declarations of estimated tax of the person to whom the information relates.

(3) Regulations

Subsection (a) shall not apply to a disclosure or use of information which is permitted by regulations prescribed by the Secretary under this section. Such regulations shall permit (subject to such conditions as such regulations shall provide) the disclosure or use of information for quality or peer reviews.

I'm not sure any of the exceptions would apply here.

[Nikki]

If he's dumping you, might be a good time to take a look at the whistleblower program.

[Famspear]

If he's dumping you, might be a good time to take a look at the whistleblower program.

And the whistleblower program might be one of the exceptions per 7216(b) (I don't know).

One issue would be: Is Lorne being asked to prepare INCOME tax returns for the client, or PAYROLL tax returns. Income tax returns would be returns of taxes imposed under "Chapter 1" of the Code, while 941s and 940s would not be.

I wonder if there is some other Code provision restricting the ability of a tax return preparer to disclose information in connection with tax returns of taxes imposed by provisions OTHER than Chapter 1.

[LPC]

Well it looks like I'll be losing this client. Says he plans to fold the company (an S-Corp) June 30 and re-open July 1 doing the same business. Says he was duped into signing up for the corporation.

Of course, all employers are required to withhold FICA and income taxes, regardless of whether the employer is an individual (sole proprietorship), corporation, partnership, trust, or whatever.

But the delusional never let reality get in their way.

[notorial dissent]

Well it looks like I'll be losing this client. Says he plans to fold the company (an S-Corp) June 30 and re-open July 1 doing the same business. Says he was duped into signing up for the corporation. But he's not blaming me (too much) and will pay all taxes due for the corp.

He was duped!!!! into signing for the corporation??? I can see where this is going, and it isn't to a good or happy ending.

So if he is folding the S-Corp, what is he coming back as? Monopoly money?

Lobo has a very good, and very serious point, the employees should be warned of the consequences of their employer's actions come tax time next year, or it won't be a happy time for them at all?

Would it be a violation if only general information, like employers are required to withold and that in the event it isn't then the employee would be liable come tax time, that surely isn't discussing anything to do with the tax return, but is general knowledge, at least for some, and does only refer to general status, along with the disclaimer that if they have any concerns they should speak with a tax professional or call the IRS help line.

[jg]

Closing the corporation may actually end up helping the employees to know what has (or has not) been withheld for taxes so far this year.

From Special Reporting Situations for Form W-2 at http://www.irs.gov/instructions/iw2w3/ch01.html#d0e686

Terminating a business. If you terminate your business, you must provide Forms W-2 to your employees for the calendar year of termination by the due date of your final Form 941. You also must file Forms W-2 with the SSA by the last day of the month that follows the due date of your final Form 941. If filing on paper, make sure you obtain Forms W-2 and W-3 preprinted with the correct year. If filing electronically, make sure your software has been updated for the current tax year.

So, the W-2s should be provided to the employees by July 31 if the business closes on June 30.

If I understand the situation correctly, the business owner is planning to comply with the filing requirements of the corporation. Hopefully that will include the timely sending (by July 31) of the W-2s to the employees.

Perhaps lorne can get the owner to include information on estimated tax in the envelope with the W-2.