Mom was a business owner and hid her dementia for years, all the while neglecting (literally forgetting) to pay the business taxes.

A good tax attorney will help you provide the right papers to prove mom's medical incompetence, & negotiate a deal. If mom's spouse is living though, he is likely liable for the failure to pay also. The lawyer can probably advise you how to protect yourself in the future also, (being her POA).

I would suggest that you get an attorney, and a doctors report of her dementia. Yes I think her retirement account would be at risk. You have to prove thru a doctors report that she had dementia.
Sorry you are going thru this trial. I’m having a hard time myself ! Take care and keep me posted!

Something just came to mind: clearly my mom had signs of dementia for a long while and was even able to behave and communicate so well when at the MD's office they had seen long term that he didn't realize it. It's amazing in a way...there were the odd things, the nastiness...but it was a trip to visit my sister when it all became clear for me, and then a routine review of typical symptoms where I could pretty much check them all off with examples...so that the MD investigated further and was surprised himself...my point is that it is essential you get medical documentation asap...not necessarily a bunch of tests...but just even documenting the mini mental, and if the professional can document how far back they observed or knew. In our case our beloved MD left the system and the new doc was so super ethical he refused to back date what the former MD had written down, using a current date instead of when it was actually identified...

OurOldHouse: this is in response to your response on Aug. 9 to Feeltheburn. You're so right about the possibility the IRS will throw in your face that your mother's dementia diagnosis was last year and the tax issues started before that.

Perhaps write an affidavit about all your remembrances of the start of her symptoms. Ask other family member or business associates to do the same.

With a tax attorney, and armed with your mom's earlier spotless business records, affidavits to the start of her symptoms, your mom's medical records, and dementia information, perhaps the IRS can help you get her tax records sorted out to the IRS's satisfaction with a minimum of fees/fines.

The people at the IRS have families too, and being prepared with data that what she did was not the purposeful act of a felon but a person who was undergoing a disease that she didn't understand might go a long way to a satisfactory conclusion. Best wishes to you. *hug*

OurOldHouse, I would question the payroll company about the money they withheld from employees checks. Did they continue to withhold money and your mom paid their bill? These taxes are not normally paid quarterly, monthly would be my best estimate for her. I would track down if she paid the payroll company the actual money. I can't imagine that they would have paid her employees for 3 months lit alone 3 years if they weren't getting paid.

The IRS is not going to waive any taxes. You may get penalties and fees lowered, but this money belongs to others and now that they know, it is going to cost her.

I would be thankful that she has the money to pay. I would check with the P/R company. I can't wrap my head around them holding this money and not making deposits. They worded that in a way that leads me to believe that they have the money and were waiting for quarterly reports? BUT 3 years they didn't deposit money, sounds like they have some culpability for this mess.

Find a good business tax attorney, they will be able to help get this sorted out, get records and maybe go after the P/R firms liability insurance, to continue to withhold taxes and not make deposits is criminal. You know she was paying them, the time frame involved proves that.

Best of luck, what a mess.

Edit: if you tell the IRS you were fighting for years for a dementia diagnosis, they are going to question why someone wasn't checking on things if you knew she was in need of a dx. I wouldn't say that, I would say we had no idea until we found out how messed up everything is and now that the dr has dx dementia we understand how things arrived here, now we need help fixing everything. Just my opinion.

I agree with others who have said that the IRS can be reasonable to work with as long as you are making a good faith effort to resolve the issue. I would make an appointment asap with a CPA and bring all of the financials, your POA documentation, and any other necessary info with you. They can help negotiate with the IRS on your behalf and help you sort out all of the financial info and determine what paperwork needs to be filed, etc.

I want to thank everybody for their wonderful, helpful responses. This is just a brief update: I managed to get complete tax and wage reports for all the years in question from ADP and sent them to the Ohio Unemployment people. They have worked through them and now want me to call for an "exit conference" so at least that's one thing that will be squared away. As far as the IRS goes, I still haven't heard anything from them thank goodness, but I will be making an appointment with an elder law attorney this week and also following up on some of the suggestions from Tacy022. I will keep you all posted. Thanks again, and hugs to all! <3