J. William Seabrooke CPA P.C.

The articles from this website are provided solely for the purpose of disseminating and sharing of important information related to a variety of topics.  In the United States the timely filing of required tax returns and the payment of the associated taxes are not an option.

Although every American may have a different opinion, my own experience has lead me to conclude that our nation has been in a downward recessionary spiral since the year 2000.  There have been a myriad of outcomes and associated adverse economic impacts which have already occurred or are still occurring throughout our nation, including (but not limited to):  a)  job losses, b) unacceptably high unemployment, c) unprecedented losses in the housing market, d) the transfer of jobs overseas which were previously filled in America, e) an erosion of the customer base for most businesses, f) personal and business failures (bankruptcy), and g) a significant loss of available working capital (businesses) or available cash after monthly living expenses have been paid (individuals).  

One of the related outcomes from one of more of the above situations is a failure to file all of the required tax returns in a timely manner (on or before the required due date), and failing to make the required tax deposits and/or pay the required taxes when due.  This article is intended to provide important information for you when either or both of these events has occurred.

Before proceeeding, there is a special major category of taxes that requires a separate discussion.  This category is “Payroll Taxes.”  Anyone who withholds payroll taxes for another person (i.e. your employee) is considered to be a “fiduciary” and one who holds assets for another person is a “trustee.”   Therefore, a fiduciary is a person who holds assets in trust for a beneficiary. It is illegal for a fiduciary to misappropriate money held in trust for someone else for personal gain.  From page 3-47 of the Thomson-Reuters “Write Up Services” manual “The IRS can also assess a penalty equal to 100% of the taxes due if the employer does not withhold or remit employment taxes.  The penalty can be assessed on any person that the IRS determines is (a) responsible for collecting, accounting for, and paying the taxes, and (b) acted willfully in not doing so.  Thus the penalty can be lievied against the company (or organization), or an officer or employee of the company (or organization)” (   ) additional entity added.

If you are in a situation which is described above, there may be courses of action which you can follow to successfully resolve the matter and move yourself back to a position of “compliance with all of the Federal and state laws.”  Generally speaking, the following events either have already occurred, are in the process of occurring, or will occur:

• You failed to file your tax returns and/or pay the associated taxes when required by law.
• You have received a notification letter in the mail from the “taxing authority” (Federal or state).  In the upper right hand corner of the notice is a  Notice Number.  This code provides specific information on the cause for the notification. 
• The body of the letter provides you with a specific period of time in which to respond (i.e. usually 30-60 days).  Even if you can not presently pay the taxes, don’t fail to respond to this notice.  It will only make matters worse for you.
• Depending on the decisions that you make and the events that occur after you receive the notification letter, you may:  a) file the delinquent report(s) and pay the taxes which are due, plus interest and penalties, b) execute an installment agreement with the taxing authority, c) mutually resolve the matter via an “Offer In Compromise” with the taxing authority, d) the taxing authority will place a “lien” against any and all of the property that you own to satisfy the delinquent taxes, interest and penalties, or e) liquidate all of the seized assets to satisfy the lien

You should certainly consult with and engage the services of a CPA, but preferably a tax attorney,who will act as your representative, IF your situation can not be successfully resolved via options a) through c) above.  This representative should have an extensive background and experience in the successful resolution of tax matters exactly as yours. (more…)