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Question about business taxes on dissolved company and Offer in Compromise

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  • Question about business taxes on dissolved company and Offer in Compromise

    DH has personally applied taxes from a failed business that had State unemployment taxes which were unpaid from 2008. The total amount of unpaid taxes was about $17k, but with interest and penalties they applied approx. $33k and filed a tax lien and we received an intent to levy our bank account notice. The IRS taxes for the business were current. He has had a CPA working with the state of Wisconsin on this for a few months now and they are submitting the paperwork for an Offer in Compromise later this week ... not sure on how much the CPA is going to recommend for the actual offer at this point. There is another partner of the former business who was also personally applied the same taxes and the state of Wisconsin did levy his bank account last week. Both my dh and his partner filed bk and they were discharged of the personally guaranteed business debt.

    Anyhow, I did a search and found someone in a similar situation with unpaid TARP taxes from a business and the advice from HHM was that the initial tax debt was owed, but not the penalties/interest as that is in the name of the company. Is this also true with unemployment insurance taxes that are personally applied? Also, does anyone have any recommendations on a certain percent of the taxes owed to offer? Once the OIC is accepted (assuming it is), do they remove the lien and negative credit report information? Our house was sold at sheriff sale on Nov 12th (the day after the lien was filed) and it went back to the bank. Does a state tax lien get paid out first in front of the bank once the house is sold or is it only if there is "extra" money from the sale of the house to go toward lien-holders after the bank?

    Thanks for any information and assistance you can provide, I really appreciate it. I wish dh would hire a tax attorney on this but his CPA insists that he can take care of this.

  • #2
    Does anyone have any advice? Thanks in advance for anything you can offer ....


    • #3
      The tax agencies will pursue this matter as they told me till they see a 'death certificate'.

      We are trying to get our business taxes paid within the plan. We filed CH13 and included the taxes. The IRS went after the business. They stopped going after the business after the business was closed. Now they are going after me personally. Hopefully now we can get this in the plan. What is helping us is that we are not confirmed yet.

      The IRS and State can be excessively abusive. I am surprised somebody hasn't shot a few of these characters for their abusive behaviors.
      Golden Jubilee was a year-long celebration held every 50 years in which all bondmen were freed, mortgaged lands were restored to the original owners, and land was left fallow: Lev. 25:8-17


      • #4
        Here's the latest update ... the accountant suggested offering $2000 as an offer in compromise. It was submitted on behalf of my dh and the other business partner. We received a letter last week stating they denied the offer and will close the account completely if we can come up with an $18,000 lump sum payment (yeah, right!) DH's business partner got a letter stating they denied the offer and will close his account if he can come up with $5000 in a lump sum payment!

        Something stinks around here!

        DH's business partner also filed bk and has no assets either. However, his home has not completed the foreclosure process - his foreclosure process started a year and a half ago and they have not heard anything for over a year on it. He is still in his home, rent-free and has 2 children. He has just recently started working again but has no reliable source of income. Our foreclosure was completed and we are now renting a home and have 4 children. DH is on unemployment. What am I missing in this, it doesn't seem quite fair.

        Waiting to discuss with the accountant on this. Basically, we want the same deal - 5K and to be done with it. Thoughts?


        • #5
          Here's an update ... after the rejected OIC, the accountant talked to the representative for the state again about our finances and he came back at a new counter offer for a total of $15k to close out the account. They would like $12,500 from dh and $2500 from the business partner. It's not the $5k that we had hoped for but at least we can close this final chapter of the business failure/bk/foreclosure nightmare.


          • #6
            How long did it take to get a response to your Offer in Compromise? I'm going through the same thing right now.


            • #7
              Hi, I saw your post on the ch. 7 board... Anyway, it took a few months for the whole process to be completed. It was probably around 6 months or so from the start of the "conversations" with the State of Wisconsin (after they applied the lien against my dh) to the final "offer" they came up with, which dh agreed upon. There was a lot of back and forth between our CPA and the representative from the state -- dh had to submit bank statements and income statements etc... The dollar amount we had to pay was higher than we would have liked, but it was a huge relief to have it over.

              I'm not sure if the IRS is faster than an individual state, but I have heard that the IRS is easier to deal with than the state on matters like this. Good luck! Maybe your thread can be moved from the Ch. 7 board over here since there aren't too many stories like this posted on here. Or make a new thread here for other people who can benefit from it - just be sure to update it with the outcome once it is over : )


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