Owing Employment Taxes

Today TaxMama hears from Ryan in the TaxQuips Forum, who recently got a shock. “My wife and I purchased and ran small business about 3 years ago for a period of exactly 6 months. We decided to give the business back to the owner we bought it from because we could no longer afford to purchase it. So we gave the business back to the original owner and had our lawyer dissolve the LLC. We just received a letter from the WI unemployment insurance office saying we owe $10K in employment taxes! And the months that it says we owe for, we did not even own the business? What can we do?”

Dear Ryan,

 Yup. This is a common problem when people exit a business without notifying ALL the government agencies involved, and without being CERTAIN all the tax accounts are paid, and those numbers are RETIRED – or CANCELLED.

 The old owner took over your employment account with WI, since you didn’t shut it down.  He knew you’d get the hit.   

OK, it can be resolved. Gather all the papers that prove the following.

1) You filed and paid all your payroll taxes while you owned and operated the business.

2) You RETURNED the business back to the original owner – and completely removed yourself from ownership.

3) You filed dissolution papers with the state.

4) That the unpaid tax assessments all took place when you were no longer an owner of the business.

It’s going to take some work.  But be persistent. Be polite. And provide all the details.  Even if you have to do it six times. You may be able to win this without an attorney. Oh. see if you can get the fraud department of the Wisconsin Department of Revenue to help you. The old owner was obviously using your ID number fraudulently.

 And remember, you can find answers to all kinds of questions about tax rip-offs and other tax issues, free. Where? Where else? At  www.TaxMama.com.

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