Can a sole shareholder be liable for past taxes from a corporation that never had any assets or income?

I formed a corporation 2 years ago that never had any assets or income and I am the only shareholder. Now I owe the minimum tax which comes to $1,600. I have inquired with 4 CPAs and even though they could charge me to do my taxes, they all suggest just walking away from it and ignoring the FTB letters and they will eventually stop. They say that if the company does not have, or ever had any assets, there is nothing for them to take. The only lawyer I know says that is a really bad idea and that they will come after my personal finances.

Asked on July 24, 2012 under Business Law, California


Cameron Norris, Esq. / Law Office of Gary W. Norris

Answered 8 years ago | Contributor

Walking away is a really bad idea.  Yes, they could possibly come after you personally and the penalties and interest tend to end up being greater than the original tax amount. 

You should contact the IRS, speak with an agent and explain the situation.  They will probably negotiate a lesser amount or at the very least a payment plan, so that you can get this taken care of.

This is why Incorporating isn't always the best idea--you should smack whoever set up the corporation for you.

Best of luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.