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Will my new business have any IRS trouble after taking on the same customer as old business?
On the side I have been helping manage and run my father's business. Due to his financial hardships and a loss of our main contract to a competitor the business has accumulated too great an amount of payroll tax debt (Including IRS, MI SIT, MI SUI) that with only the smaller service contract income left, the business must close. I would like to start my own corp and will be working with the same customer, doing the same work as I did for the old business. It will also remain on the same property which will remain owned by a third business my father has. There is no written contract or assets to aquire. However I would most likely be hiring the same employees including myself. I do not want to have any tax avoidance issues or end up taking on any of the old company's debt. We are not trying to get out of it but my disabled father is uncollectable and I myself have been working for free to help. So since someone must start a new business and take over it might as well be me. What problems or issues should I look into?
One other detail is that I am not an officer of the old business only an employee although I was running things. Also the IRS had my father sign a doc that stated he was the sole officer of the company and business was under his direction. The IRS officer told me that since I did not benefit personally from not paying the taxes I wouldn't be held responsible personally although I was a manager and signed all the checks. It may seem like I should have no worries but I really need to make sure that when the revenue officers are told of the new business that it isn't a problem for me so I'm trying to look out for what could be a problem before I do.
4 Answers
- Anonymous1 decade agoFavorite Answer
Consult a real attorney and have the appropriate sales documents prepared and liens discharged from whatever tangible or intangible property is transferred so that you can be protected. The peace of mind you buy will be worth whatever it costs. Your father will need to deal with his tax liability issues separately.
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Source(s): I am an enrolled agent licensed by the Treasury Department to represent taxpayers the same as attorneys and CPAs. I specialize in representing taxpayers who owe a lot of back tax or have not filed several years worth of returns. Your big mess is my ordinary day at the office. If you want additional help you can email through my profile. - MathewLv 71 decade ago
You will be starting a new company and not purchasing the old one. That being the case you will not have any problems. You will need to start from scratch with the new venture. It would appear that you are renting or leasing space from some business other than the one your father is abandoning. If you aquire any equipment from your fathers' company you should pay for that and you should be fine. Large corporation do this sort of thing all of the time. Just keep it at arms lenght.
- troLv 71 decade ago
your father had an EIN number for his business through which the employment taxes were due to be reported and paid
if your father has accumulated this huge debt under his EIN he needs to deal with IRS regarding this
you on the other hand, would acquire a new EIN, do not continue under your father's number under any circumstances
who you deal with etc. has nothing to do with the debts your father accumulated
and your performance will be judged on your actions, not his
if you pay your employee taxes and report as you are required you should have no trouble
- Anonymous1 decade ago
Working for free doesn't prevent you from having liability for the unpaid payroll tax. If you signed any checks or did anything with payroll for your dad, I'd consult a tax attorney.
