small business has unpaid payroll and sales taxes, and is facing TFRP

[AnneC1]

What is the name of your state (only U.S. law)? CT

I'm hoping I can get some advice. I work for a small LLC, there is one owner, and two employees. The IRS recently paid my boss a visit because he apparently has not paid any payroll taxes since he opened the business in January of 2012. They were here to get the ball rolling on the TFRP. From what I understand, he owes about $25K in payroll taxes from 2012, and has not paid anything for 2013. He also owes the state $22K for unpaid sales tax for 2012, and I'm sure for 2013.

I know that the IRS asked for basically all of his personal and business financial information, including the names and contact for all of our clients (we're in advertising), and he sent it in last week, along with a letter giving them a sob story about he "had every intention of paying it eventually". He did not request a hearing. There is no way that my boss can enter into a payment agreement with the IRS and still be able to pay our vendors and salaries on a monthly basis - the cash flow is just not there. Is the reality of the situation that the company will get shut down? If so, how long does that process typically take? I want to be able to retain my clients outside of this agency and just become self employed.

Thankfully I have a W2 from last year and all of my paystubs showing that the money was withheld. If I had known what was going on, I would have left this company months ago. The worst part is my boss hasn't been upfront with what's really going on - I know all of the details because he accidently CC'd me on an email to his accountant...

Any advice/information would be greatly appreciated!

Update - it appears that as of today, a federal tax lien has been placed on the business. I need to know if I'm still going to get paid this month, or if all accounts receivables go right to the government....sigh....

 

[Zigner]

I would suggest you start aggressively seeking a new source of income.

 

[Antigone*]

What is the name of your state (only U.S. law)? CT

I'm hoping I can get some advice. I work for a small LLC, there is one owner, and two employees. The IRS recently paid my boss a visit because he apparently has not paid any payroll taxes since he opened the business in January of 2012. They were here to get the ball rolling on the TFRP. From what I understand, he owes about $25K in payroll taxes from 2012, and has not paid anything for 2013. He also owes the state $22K for unpaid sales tax for 2012, and I'm sure for 2013.

I know that the IRS asked for basically all of his personal and business financial information, including the names and contact for all of our clients (we're in advertising), and he sent it in last week, along with a letter giving them a sob story about he "had every intention of paying it eventually". He did not request a hearing. There is no way that my boss can enter into a payment agreement with the IRS and still be able to pay our vendors and salaries on a monthly basis - the cash flow is just not there. Is the reality of the situation that the company will get shut down? If so, how long does that process typically take? I want to be able to retain my clients outside of this agency and just become self employed.

Thankfully I have a W2 from last year and all of my paystubs showing that the money was withheld. If I had known what was going on, I would have left this company months ago. The worst part is my boss hasn't been upfront with what's really going on - I know all of the details because he accidently CC'd me on an email to his accountant...

Any advice/information would be greatly appreciated!

Are you still working for this guy? And if you are, why?

 

[AnneC1]

I just found all of this out within the past week, so I'm trying to figure out exactly whats going to happen.

I'm still working here because I really want to be able to retain my clients. I handle social media for at least 6 companies who would absolutely come with me when they find out what is going on, and I can work for myself.

 

[LdiJ]

I just found all of this out within the past week, so I'm trying to figure out exactly whats going to happen.

I'm still working here because I really want to be able to retain my clients. I handle social media for at least 6 companies who would absolutely come with me when they find out what is going on, and I can work for myself.

I sincerely hope that you have your paystubs for 2013, or at least the most current ones. I can just about guarantee that he is not going to be in business much longer and your odds of getting a W2 to prove the withholding for 2013 are going to be slim. You are going to need those paystubs.

 

[AnneC1]

Update!

I updated my original post.

It appears that as of today, a federal tax lien has been placed against the business. I know that liens mean that the government has a right to all property, including accounts receivables. Does that mean that all money we're owed is going to go right to the IRS instead of the company? I guess that means we can't get paid....

 

[Antigone*]

I updated my original post.

It appears that as of today, a federal tax lien has been placed against the business. I know that liens mean that the government has a right to all property, including accounts receivables. Does that mean that all money we're owed is going to go right to the IRS instead of the company? I guess that means we can't get paid....

Don't invest any more time and effort with this company.

 

[LdiJ]

I updated my original post.

It appears that as of today, a federal tax lien has been placed against the business. I know that liens mean that the government has a right to all property, including accounts receivables. Does that mean that all money we're owed is going to go right to the IRS instead of the company? I guess that means we can't get paid....

Yes, that is exactly what it means. It means that the IRS sees no other way to collect the money. Its definitely going to put the company out of business as there will be no cash flow to finance the business's activities. Sorry. I really do hope that you have some paystubs, particularly the most recent ones.

 

[AnneC1]

Yes, that is exactly what it means. It means that the IRS sees no other way to collect the money. Its definitely going to put the company out of business as there will be no cash flow to finance the business's activities. Sorry. I really do hope that you have some paystubs, particularly the most recent ones.

I get paid monthly, and have every pay stub since I've worked here. I confronted my boss about it, and he just said that "all a tax lien means is that I owe taxes, it doesn't impact you at all" Jerk.

 

[Antigone*]

I get paid monthly, and have every pay stub since I've worked here. I confronted my boss about it, and he just said that "all a tax lien means is that I owe taxes, it doesn't impact you at all" Jerk.

Yes he is. He is a lying jerk at that. Really, Anne for your own sake and reputation, distance yourself from this man's business lest you put your reputation on the line as well.

 

[davew128]

Yes, that is exactly what it means. It means that the IRS sees no other way to collect the money. Its definitely going to put the company out of business as there will be no cash flow to finance the business's activities. Sorry. I really do hope that you have some paystubs, particularly the most recent ones.

I don't know that I agree with that. If the employer has acrrued unpaid wages from before the issuance of the lien, I'm not entirely sure the lien takes priority.

OP, get out. Just GET. OUT. You aren't getting any more money from this guy, and its a REALLY bad business practice to not remit payroll taxes. Bear in mind, more than half of that money was otherwise YOUR pay and was withheld from you, so in essence he's stealing from you.

 

[swalsh411]

Bear in mind, more than half of that money was otherwise YOUR pay and was withheld from you, so in essence he's stealing from you.

Not really. He will still get the credit on his taxes for the withheld income tax on his W2, and will get credit with SSA for the Social Sec and Medicare. The fact that it hasn't actually been paid to the government is the business owner's problem not the OPs. The employees don't get punished for the employer's failure to remit withheld taxes.

Not disagreeing with the advice to leave immediately though.

 

[LdiJ]

I don't know that I agree with that. If the employer has acrrued unpaid wages from before the issuance of the lien, I'm not entirely sure the lien takes priority.

OP, get out. Just GET. OUT. You aren't getting any more money from this guy, and its a REALLY bad business practice to not remit payroll taxes. Bear in mind, more than half of that money was otherwise YOUR pay and was withheld from you, so in essence he's stealing from you.

Dave,

I have seen these liens in action. Once the IRS gets their hands on the customer lists they have the customers remit all outstanding balances directly to the IRS. Technically I do think that accrued wages should come first, but it doesn't work out that way in practice.

 

[davew128]

Not really. He will still get the credit on his taxes for the withheld income tax on his W2, and will get credit with SSA for the Social Sec and Medicare. The fact that it hasn't actually been paid to the government is the business owner's problem not the OPs. The employees don't get punished for the employer's failure to remit withheld taxes.

I understand that. My point is that the majority of the money owed is actually wages that had been withheld. Were it not for the withholding aspect, one could reasonably wonder if the OP would have gotten the wages at the time they were supposed to be paid.

 

[davew128]

I have seen these liens in action. Once the IRS gets their hands on the customer lists they have the customers remit all outstanding balances directly to the IRS. Technically I do think that accrued wages should come first, but it doesn't work out that way in practice.

I was referring to cash in the bank not AR lists. I totally agree vendors will get a lien notice instructing them to pay amounts owed directly to the IRS. If vendors are getting lien notices, bank levies are almost assuredly coming at any time.