We had to amend our 2011 and 2012 LLC tax returns due to
errors committed by our original CPA. Since I was listed as the TMP (Tax
matters person) in the LLC operating agreement will I be responsible for these
errors? My partner is mad at me because of this and am scared he may take any
legal action against me. The errors were discovered when my partner sought a
second opinion from another CPA. I immediately agreed to amend both 2011 and
2012 LLC tax returns to rectify these errors.
Amending of LLC tax returns triggered amending of our personal tax returns.
Since the difference in taxable income is huge (40K for 2011 and 80 K for 2012) we had to pay taxes, penalty and interest.
I just amended my personal tax return this week. My CPA (not the original CPA who did the LLC return or the CPA that amended the LLC tax returns) filed the amended return for me and requested for abatement of penalty and interest.
Would IRS accept this? Would IRS impose additional penalty due to the huge tax bill (about $18K for 2011 and $25K for 2012)?
Will I be in trouble if my partner files a complaint with IRS or goes for litigation?
Amending of LLC tax returns triggered amending of our personal tax returns.
Since the difference in taxable income is huge (40K for 2011 and 80 K for 2012) we had to pay taxes, penalty and interest.
I just amended my personal tax return this week. My CPA (not the original CPA who did the LLC return or the CPA that amended the LLC tax returns) filed the amended return for me and requested for abatement of penalty and interest.
Would IRS accept this? Would IRS impose additional penalty due to the huge tax bill (about $18K for 2011 and $25K for 2012)?
Will I be in trouble if my partner files a complaint with IRS or goes for litigation?
Answer :
1 : In general, LLCs are very flexible as to how the
business is managed. This means that some partners can have more responsibilities
than others. A partnership may only designate a general partner as its tax
matters partner. LLCs with at least 10 members are subject to the unified audit
procedure and must have "tax matters" partners in accordance with the
TEFRA rules. A tax matters partner is designated by a partnership to represent
the partnership before the IRS in all tax matters for a specific taxable year.
some partnerships/ mmllc, must have a tax matters partner .you, as a general
partner, are the person who among the LLC owners is the person responsible for
tax matters of the LLC; having an LLC may shield you from some personal
liability on creditors, but most states and the IRS have legal recourse to
assess tax penalties against "responsible persons" if the LLC does
not pay tax due. LLC partners, limited partnersm, are only responsible for the
debt that they personally guarantee, and are not responsible for the debts held
by the company. This means that if the company goes into debt, the partners do
not have to pay for it with their personal money.On the contrary , a general
partner in a partnership takes part in the daily operations of the partnership
and is personally responsible for the liabilities of the partnership.
2 : I guess most taxpayers believe it is easy to get abatement of IRS penalties and interest however you should be aware that it is a very difficult process. Reviewers at the IRS are very picky and do not easily accept the requests to abate penalties;it is a lot easier for them to deny the penalty abatement than to accept it because of the hoops they must go through in the process to get your tax abated. To get your penalty request abated requires manager signatures. Therefore all abatement of penalty cases must be fully documented, well thought out and have substantial documentation to prove a reasonable cause abatement exists. I guess it makes sense if you want an IRS abatement of penalties to call former IRS agents and managers who know the system and the inside techniques used by the IRS. However, as long as you believe the IRS has charged penalties and interest in error based on the incorrect returns, or due to circumstances not your fault but your CPA’s fault, you may qualify for an abatement. With an abatement, you may be able to eliminate part or all of your penalties and interest, but not the initial base tax amount that caused the penalties and interest. Most of the time with an abatement, you will be able to eliminate the majority if not all of the penalties, but not the interest. Eliminating these penalties may lift a huge financial burden off of you, most of the time the penalties make up 25% of the total tax debt amount owed. A penalty abatement can be right for you if you can pay the tax liability owed, but you believe you should not be held liable for the penalties incurred. If you apply for an abatement and it is accepted, it is expected that you then pay your tax liability in full. In order to qualify, you must be very convincing that you should not be responsible for the penalties.
SO, even if the IRS grants your request, you will still have to pay the interest, penalties on taxes you owe. If the IRS does not grant your abatement request, the interest you owe will continue to accrue during the time they are considering your request. Guidance for Amended Partnership Returns
3 : Possibly Unless you pay the penalties/interests accrued. You may contact experts in penalty abatement in your local area. Also, you may contact your former CPA; Give him a copy of the notice from the IRS. Since there are any penalties, it's highly likely that the CPA will get the IRS to waive them. If they don't and it was his error, his Errors & Omissions insurance should cover them, or he'll…Read more…
2 : I guess most taxpayers believe it is easy to get abatement of IRS penalties and interest however you should be aware that it is a very difficult process. Reviewers at the IRS are very picky and do not easily accept the requests to abate penalties;it is a lot easier for them to deny the penalty abatement than to accept it because of the hoops they must go through in the process to get your tax abated. To get your penalty request abated requires manager signatures. Therefore all abatement of penalty cases must be fully documented, well thought out and have substantial documentation to prove a reasonable cause abatement exists. I guess it makes sense if you want an IRS abatement of penalties to call former IRS agents and managers who know the system and the inside techniques used by the IRS. However, as long as you believe the IRS has charged penalties and interest in error based on the incorrect returns, or due to circumstances not your fault but your CPA’s fault, you may qualify for an abatement. With an abatement, you may be able to eliminate part or all of your penalties and interest, but not the initial base tax amount that caused the penalties and interest. Most of the time with an abatement, you will be able to eliminate the majority if not all of the penalties, but not the interest. Eliminating these penalties may lift a huge financial burden off of you, most of the time the penalties make up 25% of the total tax debt amount owed. A penalty abatement can be right for you if you can pay the tax liability owed, but you believe you should not be held liable for the penalties incurred. If you apply for an abatement and it is accepted, it is expected that you then pay your tax liability in full. In order to qualify, you must be very convincing that you should not be responsible for the penalties.
SO, even if the IRS grants your request, you will still have to pay the interest, penalties on taxes you owe. If the IRS does not grant your abatement request, the interest you owe will continue to accrue during the time they are considering your request. Guidance for Amended Partnership Returns
3 : Possibly Unless you pay the penalties/interests accrued. You may contact experts in penalty abatement in your local area. Also, you may contact your former CPA; Give him a copy of the notice from the IRS. Since there are any penalties, it's highly likely that the CPA will get the IRS to waive them. If they don't and it was his error, his Errors & Omissions insurance should cover them, or he'll…Read more…
No comments:
Post a Comment