Business and tax question

[Oduchik83]

What is the name of your state? VA

When starting a LLC with two business partners and one is delinquent in federal student loans and has a payment plan set up with the IRS to take their tax refund as payment, does the IRS have rights to the profits from the business or refund from the business should there be one? Thank you in advance.

 

[LdiJ]

What is the name of your state? VA

When starting a LLC with two business partners and one is delinquent in federal student loans and has a payment plan set up with the IRS to take their tax refund as payment, does the IRS have rights to the profits from the business or refund from the business should there be one? Thank you in advance.

No. In a partnership the profit from the business flows through to the individual tax returns of the partners via a Schedule K1. The partnership is a pass through entity and does not pay taxes, therefore the partnership would never have a tax refund.

In this instance the IRS does not actually have any dog in the fight and is only acting as an agent of the federal government to redirect any tax refund for the student loans. Federal student loans delinquencies can be levied from any personal tax refund that he might have.