QUESTION:
My wife and I set up our business in the names of our 2 sons. It is now going bad and we are going to close it. We have over $50,000 in unpaid payroll taxes. We have no assets. Our sons are technically responsible since the business is in their names. Can our sons avoid this debt using an approach similar to Innocent Spouse?
ANSWER:
The Innocent Spouse approach will not work here. If the business closes, the IRS will assess the Trust Fund Penalty (the portion withheld from employee paychecks) against all “responsible persons.†My approach would be to take the position that the sons are not “responsible persons†and therefore should not be assessed the Trust Fund Penalty, especially if they had no input into the business. Thus, we would first fight the assessment and then, if that fails, we can set up a payment plan or use another approach to resolve the payment issue. I will be happy to talk with you about your situation and tell you how I can help.