FUTA never filed

[C.B. ARELLANO]

i am trying to clear up problems with back taxes let by my deceased father. i recently discovered he never filed any FUTA forms. he (sole proprietorship) has had 3-6 employess for over 20 years and i don't know where to start. i only have records for 10 years and we have never received any notices from the IRS regarding the form 940. Please advise. God Bless you.

 

[loku]

Back taxes

Before giving my opinion, I’d like to have a few facts:

(1) Did your father leave a significant estate?
(2) Do you intend to pay the amounts due out of that estate?
(3) Would any person, other than the estate be liable for any amounts in excess of what the estate could pay?

 

[C.B. ARELLANO]

estate

no, my father left very little. more like nothing after other debts were paid off.
my mother is liable for payment.
i am not sure of how much money we're talking but
we would hope to make some type of arrangement if
it's realistic.
Thank you for your reply.

 

[loku]

FUTA

It is not possible to even generally estimate the amount due without knowing the amount of wages paid over the years. But the period of time is long enough so that even if the wages were very low, when penalties and interest is added, the bill could be very high.

Are you sure that your mother is liable for this? If so, under what theory? (I'm not saying she is not, but that is possible under certain circumstances).

 

[C.B. ARELLANO]

the only reason i believe she is responsible is because they were married when he passed. irs has mailed the business letters demanding payment of 941 that were not filed either. the business is now in her name. if there is any way to get around this i would like to know. i am only assuming she is liable. i hope i'm wrong.
thanks for your reply,

 

[loku]

Innocent Spouse

Your mother may not be liable for this at all. I don’t know if the payroll tax liability would come under the following provisions, but I think it might.

Relief from joint liability. In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. You can ask for relief no matter how small the liability. There are three types of relief available:

1)Innocent spouse relief, which applies to all joint filers.

2)Separation of liability, which applies to joint filers who are divorced, widowed, legally separated, or have not lived together for the past 12 months.

3)Equitable relief, which applies to all joint filers who do not qualify for innocent spouse relief or separation of liability and to married couples filing separate returns in community property states.

Publication 971, Innocent Spouse Relief, explains these kinds of relief and who may qualify for them. Click on the following to download a copy of Pub 971: http://www.irs.ustreas.gov/forms_pubs/index.html

I would suggest you get Pub 971 and see if you think it applies to your mother.

But in any case, I strongly advise you to hire a CPA to handle this for you. A good CPA will be able to tell you if your mother is liable, and if she is, to work out a satisfactory settlement.