Can a sole shareholder be liable for past taxes from a corporation that never had any assets or income?
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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
Answers:
Cameron Norris, Esq. / Law Office of Gary W. Norris
Answered 11 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.
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