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They are coming after her now. She has some savings which is mostly from Social Security, and all the rest of her money is in her retirement account. Will they be able to take her retirement account? She needs that to pay for memory care. I'm her daughter & POA.
There was absolutely no criminal neglect here. She was very meticulous about everything up until about 2015 when everything started falling away and nobody knew what was going on until all the damage was done. When I found out, I stepped in and shut down her business.
I know I need to see a lawyer with her but just wanted to bounce this off of you all and see if anybody's been in a similar situation or if you know if the tax agencies will be able to take her retirement account to satisfy the debt.

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Ok, the first thing you have to do is check an old tax return and see if she was a cash or accrual taxpayer. If accrual, fill out an IRS Form 3115 and switch to cash. It will be too difficult to recreate. Peachtree is not user friendly so it allows single sided journal entries so that would just be a clusterf*uck unless you know what you are doing. It will make things easier because you can record expenses based on dates going in and out of bank accounts rather than worry about when to recognize revemue, expenses and WIP
Them separate into year piles.

Next, register for Ohio online services with the Dept of Taxation. Build a relationship so you can access all online returns. Just an FYI, it'll pop up they are sending you a PIN and youll receive it in 10-14 days. If you go right to the correspondence, the letter is there so you do not need to wait. It is against the law to use her username and password. All withholding and school tax returns are there. Then go to EFTPS and do the same or get her info. State login is individual, federal is by entity.

Once you figure that out, call ADP. They should have filed all the tax returns even with basic payroll. Have them send you copies of quarterly returns. I would also verify through the bank account they didnt make the payments. You should have 3 transactions per pay period: payroll, taxes and fees. If they did not file the returns, Id figure out why not.

Pay taxes based on the 941 and 940 forms, do not worry about interest or penalties, a letter can be written to get interest waived and penalties reduced. Make sure you get everything in the right periods.

With unemployment, set up a payment plan, they will go out 52 weeks.

If you do not do some of the groundwork yourself, people like me will charge you alot of money she cant afford. No one is going to start garnishing things yet, it took the IRS over 6 years to notice and garnishment was after they got a visit from a field agent they ignored.
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OurOldHouse Jul 30, 2019
WOW, THANK YOU! this was amazingly helpful! I think I can do most or all of what you just described! I can't thank you enough!! :)
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Retired IRS Revenue Officer (tax collector) here answering your question. The bottom line answer is yes, they can take her assets to pay her debts. It's more detailed though. The IRS can take her assets like her bank accounts, and other property, even her home and car. It can also levy (garnish or seize) her Social Security income. She will get to keep part of the SS income but they can take it. The taxes that generally go unpaid to the IRS from a business are the taxes withheld from the employees wages (the Social Security and income that the employees get credit for, maybe never even knowing the company they worked for messed up and didn't turn in their money). Also, when a business owner doesn't turn in the withheld taxes, and the business portion of the SS tax, it is typical that they haven't filed or paid their own income taxes. That's on the federal side of things. For state and local taxes each state would have it's own laws on what assets or income can be reached, but they are not going to be able to reach her SS. The types of taxes involved here are more likely to be sales taxes, unemployment or labor & industries disability taxes, or state and local income taxes. With any of the agencies, try filing an appeal to waive some of the penalties and interest due on the unpaid taxes based on her mental incapacity, and provide some documentation. Chances are slim to get some relief, but maybe. There are also programs that allow the agency to legally compromise (reduce)the taxes owed. Laws vary, but the concept is that if the agency is shown that the delinquent taxpayer cannot fully pay the debt (taxes, penalties and interest) by the end of the statute of limitations (which also varies) they may settle for an upfront payment of what they think they can get. This requires a formal application and complete disclosure of income and assets for the agency to consider making a deal to give up the rest of what is legally owed to collect now. Ask the agencies about how to make An Offer in Compromise.
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Debster Aug 1, 2019
This board is really a great place to get valid information and direction! We're really blessed to have many retired or currently working, professionals who hang out here and provide assistance.
Many thanks to you, the social workers, the psychologists and the many other people who help just because they can!
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Nobody is going to jail for this...this is a civil matter, with no criminal intent. The demented taxpayer will not be going to jail for anything. Stop scaring people with uninformed speculation.
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Penalties and interest can be huge amounts but may be negotiable. I've been through a business tax audit. If I were in your shoes I'd spend the money to consult with a good tax attorney. Don't talk to the IRS without representation.
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here is a lot of scare stuff here that doesn’t help. In cases where there is no deliberate fault, the tax authorities here and in most places still want the tax that wasn’t paid, but they don’t necessarily use their powers for fines, penalties, or (with luck) interest. It is often possible to amend or lodge past returns, which can help too.

Tacy’s advice is great. Collect up all the information you can, before you start incurring bills from accountants or lawyers. My suggestion mirrors Tacy’s about building a relationship with an individual in the Tax Department. Start while you are flustered, worried, at a loss about what to do etc – you want them to feel sorry for you, which is fully justified. I messed up our farm tax for about four years (in spite of being an accountant, though not a tax specialist). I was distraught. The wonderful lady in the Tax Office sorted out all my old returns and explained it to me. It cost me nothing besides the amount we should have paid in the first place. I hope that you have good luck too!
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OurOldHouse Aug 2, 2019
Thank you <3
It helps so much to know that there are people here who are so understanding of this situation and willing to help - it really makes me feel like there might be a light at the end of the tunnel!
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More than a decade ago, I had to take care of my parents’ tax return after my father’s death. He had been using an accountant in his small town who was not a CPA. In reviewing the return, I thought some of the numbers just didn’t seem right. It involved a property that my father had sold on contract a few years earlier. It turned out that the accountant had made a mistake converting a fraction to a percentage, resulting in the taxable portion of the sale being calculated at only one percent of the correct figure. I went back to the accountant who admitted his mistake and went back and corrected the current return and several previous returns. It resulted in a pretty big bill and the IRS and state both added interest, but there were no penalties assessed. It was a mistake, not fraud, and we corrected it as soon as it was discovered. I agree that you should gather up whatever records you have and follow Tacy’s advice. Show the tax people that you are making an honest effort to clear up this mess.
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robinr Aug 1, 2019
The preparer made the error and should have been held responsible for the interest!!!
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They arent going to send her to prision and an Enrolled Agent isnt the top type of tax preparer and it isnt going to court, lol.

First thing, comp isnt paid to the state, it is an insurance policy so you would just get dropped and need to go to a fund rather than insurance company. You dont need to buy an EMR rating for retail so its not something to stress over.

So a few questions:

1. Are you just getting letters from the IRS or has a field agent came yet?

2. How are/were sales and expenses tracked?

3. Why are you doing use tax?

4. What state are you in?

5. How many employees?

6. Was she ever delinquent before?
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DollyMe Jul 30, 2019
I know that she is most likely not going to, but, she could. And I never said that comp was paid to the state, you are improvising here. Finally, an enrolled agent, can take the tax court exam, and qualify to represent taxpayers in court...mine has represented me several times. Lol! Since you seem to have a handle on this...I will back out of the conversation.
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Pure and simple, it is Lawyer time. They may advise you make an appointment with the IRS with all the info you have. This is not going to be the first time this has happened and they will likely appreciate that it is not "on you" and that you are doing all you can to provide what you can. Bring all records you have of what she DID file, if anything, of what she kept records of, or anything you know. Yikes! Please update us how it goes.
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OurOldHouse Jul 30, 2019
Luckily most of the recent stuff she did was being stored at her house so I did manage to snag a lot of paperwork that could probably help. And I will most certainly keep you guys updated because I bet this is an issue that other people would like to know how to deal with! I've been lurking on this site ever since last year when she was finally diagnosed and I cannot express how helpful this site has been for me; you guys are a great community and I really appreciate all of the answers!!
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IRS can seize any funds in her name. Taxes are considered super debts and they take the money however they can. Get a lawyer to try to negotiate a better deal. Owing taxes can impact many things.
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In the states, returns can only be amended for 3 years so the return for 2015 would have been due April 2016 unless an extension was filed which would make it October. There is little chance it can be amended. Also, our government enforces penalties not interest.

OP, did mom have a loan or line of credit for the bank? If so, banks require yearly audited financials and copies of business tax returns. If you get copies of them it will give you a starting point. You need to look at loan documents to see if that life insurance policy was collateral on the loan.

As for the employee SS statement, have her check her SS number is correct on her check stub. I have seen input errors where an employees SS # starts with 378 but 387 was entered. It doesnt make sense since ADP does all the filing and tax payments.
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OurOldHouse Aug 2, 2019
There were there were no loans or lines of credit unfortunately. And when I asked ADP why they didn't make those tax payments they said she was responsible for sending them the quarterly filing reports that she filled out, and then they would make the payments based on that. I did manage to get tax and wage reports from them for all of those years so I have forwarded that to the state unemployment office already and I can use it for some of the other taxes as well.
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