They are coming after her now. She has some savings which is mostly from Social Security, and all the rest of her money is in her retirement account. Will they be able to take her retirement account? She needs that to pay for memory care. I'm her daughter & POA.
There was absolutely no criminal neglect here. She was very meticulous about everything up until about 2015 when everything started falling away and nobody knew what was going on until all the damage was done. When I found out, I stepped in and shut down her business.
I know I need to see a lawyer with her but just wanted to bounce this off of you all and see if anybody's been in a similar situation or if you know if the tax agencies will be able to take her retirement account to satisfy the debt.
My next step is to get on the Ohio Business Gateway portal. I do have her login information, I know you told me to set up my own but my financial POA includes all business stuff too; would that give me the ability to log on with her credentials legally?
The IRS is not going to waive any taxes. You may get penalties and fees lowered, but this money belongs to others and now that they know, it is going to cost her.
I would be thankful that she has the money to pay. I would check with the P/R company. I can't wrap my head around them holding this money and not making deposits. They worded that in a way that leads me to believe that they have the money and were waiting for quarterly reports? BUT 3 years they didn't deposit money, sounds like they have some culpability for this mess.
Find a good business tax attorney, they will be able to help get this sorted out, get records and maybe go after the P/R firms liability insurance, to continue to withhold taxes and not make deposits is criminal. You know she was paying them, the time frame involved proves that.
Best of luck, what a mess.
Edit: if you tell the IRS you were fighting for years for a dementia diagnosis, they are going to question why someone wasn't checking on things if you knew she was in need of a dx. I wouldn't say that, I would say we had no idea until we found out how messed up everything is and now that the dr has dx dementia we understand how things arrived here, now we need help fixing everything. Just my opinion.
Perhaps write an affidavit about all your remembrances of the start of her symptoms. Ask other family member or business associates to do the same.
With a tax attorney, and armed with your mom's earlier spotless business records, affidavits to the start of her symptoms, your mom's medical records, and dementia information, perhaps the IRS can help you get her tax records sorted out to the IRS's satisfaction with a minimum of fees/fines.
The people at the IRS have families too, and being prepared with data that what she did was not the purposeful act of a felon but a person who was undergoing a disease that she didn't understand might go a long way to a satisfactory conclusion. Best wishes to you. *hug*
Sorry you are going thru this trial. I’m having a hard time myself ! Take care and keep me posted!
Figure out exactly what was and wasn't filed/completed and paid. Contact that payroll company What exactly did the unemployment letter state?
If it's just unemployment, then something isn't adding up. After reading through the comments---it sounds as if the payroll company would have paid everything accordingly. So...what's really happening--you received a standard unemployment taxes due notice? What was the payroll company's response??
I just viewed a few docs about this exact same issue in Kentucky, yet in reality all taxes were paid. Yet something clerical happened at the state level. A lien was placed and removed, due to the error being found. It's a jolting experience for sure. But verify the accuracy of the notice against numbers that ADP(the payroll company) will have somewhere.
ADP sent your mother the 941 form since she was not set up with ADP's Tax Filing Service or was set up as deposit only. The quarterly report that normally Displays SUI taxable wages and total unemployment taxes due in the quarter wasn't generated, likely.....It's fixable, not too complicated. Go online and research what is needed. It seems as if your mom didn't utilize ADP to its fullest capacity.
So don't panic--use your brillance, and be patient. As you know it's boringly boring stuff. The mistake likely will be found by the payroll company. Dig deeper you might find that your mother did everything correctly. Yet somewhere somehow a decimal was recorded incorrectly.
Tacy22 has provided the most accurate information. You need to verify what is actually happening. The payroll company should have paid those taxes that were withheld from employees checks and the companies matching dollar amounts. This could be a data input error. Ask the employee that says she has no income for 3 years to look at her w2 or paystub and verify the information is correct, I would question her about any changes in her life, divorce, name change, etc. I would also contact the payroll company and request a copy of the payments made on behalf of your moms company.
I would verify that there is even any taxes owed before I spent any money on attorneys. Mom will have to pay any withholding taxes or unemployment taxes that were generated by payroll. They won't say no problemo. Her worker's compensation insurance would be determined by a year end audit. They would not provide 3 years of coverage without an audit. To many people try to hustle the system and they have figured it out. I would let the insurance company come to her, however, it is not necessary to pay additional money to them, she more than likely had a deposit that was based on annual premiums. They can't come after her unless they have done the audit, they don't have any numbers to go by.
Please verify if there is even any issue, besides one employee with a problem on a SS benefits notice. This could so not be a huge issue. Even if it is a problem at least you are operating from a position of knowledge and not fear and confusion.
If you need an attorney, big if, please find a good business tax attorney. They are on first name basis with tax reps and they can get things done that you can't. I would not sign anything, if asked hire an attorney. This really should be about paying taxes and nothing else.
Unfortunatly your mom is personally responsible as the S Corp holder. Were there other stock holders?
The social security issue is absolutely legit, it was not just the one employee who had that problem, it was all of them I found out.
As for workers comp, if I remember correctly, all she had to do each year was fill out a short form that listed what type of work each department did and show that there hadn't been any accidents - it wasn't a big thing, & she may have just copied reports from previous years, I don't know, I have not spoken to them yet. But from the bills I saw it looked like they were racked up with lots of penalties/interest/fees due to non-payment/non-reporting and they were estimating the amount that she owed.
My dad is the only other stock holder (minority) but they've been divorced for 20 years and he doesn't seem to care what's going on since he's retired in Florida with his new(ish) wife. He did mention he hadn't received a K-1 from her in many years - I don't know how he is handling that on his taxes but he seems to have figured out a way to deal with it.
Also, paying for an elder law attorney comes out of your mom's estate, you can get reimbursed for it. We paid a pretty penny for the advice, but in the long run, it has save my parents from losing their assets due to liens from creditors.
I had a similar issue (not with a business) but my parents stopped paying creditors. I found that the BEST SOURCE of advice was with an elder law attorney. Her first priority is that my parents keep as much money as possible for their care. She gave me advice (I can pay the debts and have little money for their care or focus on paying for their care first and let the creditors do the work of taking them to court.) Between her and another real estate attorney we were able to figure out a way to protect their assets as much as possible.
But this was COMPLICATED and it involved working with her, seeking out referrals with other attorneys with their own specialty.
Best of luck to you and your mom. I have found it a very difficult and nail biting experience to comb through their finances and discover more and more debts. It sucks. But I'm building a tolerance towards bad financial news and I'm learning a lot so I don't make the same mistakes as they did. I have done some incredibly heroic work for them to save them from some of the consequences of my dad's dementia. Sigh...but no applause from my family, I'm an invisible hero. :-) But I do pay myself on the back every so often, I feel proud at figuring out some loop holes with the help of a couple of different attorneys. I'm proud that that I rescued them from getting thrown out on the street due to unpaid property taxes. I couldnt have accomplished any of this with the elder law attorney.
best wishes!
Hope that helps a little!
Her Social Security definitely is. I just dealt with Legal Aid Attorney on this. They had to research it, but they verified the information.
There is a provision in publication on filing deadlines that states that if you are physically or mentally incapable I'm completing your tax returns during a given., That the time limits and deadlines do not apply! This also means if there is a year she is owed money back, and the IRS says too much time has passed, they are obligated to steal refund that money and apply it to the other tax balance! This is not used very often, and many IRS officials are unaware of it. I had to put the provision and get my congressman involved as an advocate.
The key is you need documentation from her doctor, explaining her condition the fact that she was able to hide it, but it is now obvious it had been pre-existing since approximately give a date based on the evidence of issues with business paperwork and other behavioral issues you may have noticed.
ThisThis provision may sldo spply to penalities...but I don't hsve it in front of me. It does apply to past refunds. It ststes, " no time limits apply"!
Also you have to push for your rights snd negotiate. You probably have to get IRS & state forms signed by her, authorizating access..and to negotiate on her bdhalf. Ask for the IRS to assign you an advocate...they van be very helpful.
Also know that the IRS would rather work out s plan eith you thsn seize non-liquid assets. They can't touch her Social Security or any other Federal Benefits.
They can pit a lien on her home but can't force her to sell it...you just need to pay balance owed at closing, like a mortgage.
They can seize bank accounts, but if Federal Benefits like Social Security went in, then you document that and they have to free up that money. I would set up a new account for all Protected Income!
Unpaid Sales Taxes and Employee Tax Withholdings are issues the state & Fed are sticklers on, but you can negotiate with them! My MIL had to do it when then husband embezzled without her knowing. That was harder, but she kept her house and got her accounts unfrozen.
Again, use your IRS advocate, Agency for Disabled, and Agency on Aging. Once you've done that get staff of your Congressial Rep. involved.
Finally, if she is in a place where she qualifies for or recieves other Federal Benefits, like Medicaid, Food Stamps, assistance with utilities, then they may make you sell/ liquidate the business, but she would be on Can Not Collect (CNC) status after you work with IRS. If she lives for 10 years on that status, Fed. IRS debt is forgiven.
Also if she used an accountant over the years, they are your first contact, as they can be held liable too. If she fired them, or stopped sending information regularly, use that to document start of failure to function.
Follow up any phone conversation with a letter back to IRS etc., stating " Regarding our discussion on (date) with (names) concerning....'. Then state
was discussed & close with, "Please contact me in writing if any of this is incorrect." The notes They make in The System have a way of disappearing or being overwritten. Send it Certified/ Return Reciept.
My father, an attorney taght me that years ago. Good Luck and patience and calm are your friends. Also know you have power and by law the IRS must work with you politely!!!!
Many thanks to you, the social workers, the psychologists and the many other people who help just because they can!
Your elected representatives/senators have case managers that likely specialize in areas pertinent to their districts, such as veterans affairs. They are - in my opinion - a vastly underutilized resource. Regardless of whether you voted for them, if they govern your region, they should be able to help.
Example - some years ago, during a bout of extended unemployment, I let my passport lapse. I didn't see myself leaving the country anytime soon. Then I got a contract job that, in short order, wanted to send me to Singapore on a 10-day assignment. I nearly panicked because the trip was 3 weeks away. I called one of my state's two senators, explained the situation and because the passport was within two years of expiration, they were able to expedite my request and get me a new one in about 4 days. They don't pay the associated fees - I had to assume that - but they pushed the paperwork through and there is no charge for the help of representatives' or senators' staff.
This grave tax/medical issue could be something they could help with. You have nothing to lose (but time, which may be precious I understand).
There was an audit performed. The IRS was more interested in helping to get this fixed. It took about six months to get through it. I know the employer had a CPA help provide the records that IRS requested. I believe the employer was fined, but no jail time. And this employer did this with full knowledge.
Mom will not go to prison. Just do whatever the IRS requests. Help in every way you can.
Tacy's guidance will be a tremendous help.
did owe the IRS a lot of money and his social security was garnished. And he had to keep his money separate from MILs to keep the IRS from seizing her money too. Or so he says.
So situations like yours and his happen probably more often than we think.
Salvation Army seems to be a good place to seek advice and where to go and who to see. They have a lot of resources to help people with financial problems and mess Look online for help in your area but don’t try to be cheap about it. Why not get your representative to make tentative approach to IRS?
I think you may be surprised at how reasonable the government may be
Tacy’s advice is great. Collect up all the information you can, before you start incurring bills from accountants or lawyers. My suggestion mirrors Tacy’s about building a relationship with an individual in the Tax Department. Start while you are flustered, worried, at a loss about what to do etc – you want them to feel sorry for you, which is fully justified. I messed up our farm tax for about four years (in spite of being an accountant, though not a tax specialist). I was distraught. The wonderful lady in the Tax Office sorted out all my old returns and explained it to me. It cost me nothing besides the amount we should have paid in the first place. I hope that you have good luck too!
It helps so much to know that there are people here who are so understanding of this situation and willing to help - it really makes me feel like there might be a light at the end of the tunnel!
Is this standard in your part of the country?
In AZ and NV the payroll company is essentially the employer and pays everything through their accounts and you get a bill for payroll period. If you don't pay they fire your employees.
I am just curious because it seems like an odd practice for what I am used to.
You are so generous with your knowledge, thank you for sharing, it is truly appreciated.
Thank you. I am happy that there are those that know this like the back of their hand.
But you are the smartest cookie I have met in a long while.
They will want their money, but they won't be vile about it. Lawyer or accountant...? Other posters know better than I do whose assistance it's best to seek.