Can a 7.5 percent partner with no management be liable for back taxes of the company? 3 Answers as of December 16, 2010

My son was listed on my now defunct company's 2002 & 2003 tax returns as a 7.5% partner. He had no management say whatsoever and no corporate title. Can the IRS hold him liable for unpaid payroll taxes and penalties?

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Mankus & Marchan, LTD
Mankus & Marchan, LTD | Tony Mankus
If your son had check signing authority and did, in fact, sign some company checks, the IRS could argue that he was a "responsible official" and propose to assess the trust fund recovery penalty against him for part of the unpaid payroll taxes. (IRC 6672). However, you have a right to appeal IRS' proposed assessment against your son, and even take the case to the US District Court. However, you should retain a knowledgeable tax attorney to help you through the process.
Answer Applies to: Illinois
Replied: 12/16/2010
LT Pepper Law
LT Pepper Law | Luke T. Pepper
He can be held liable only to his stake in the company. So his liability depending on the agreement should be limited to his stake.
Answer Applies to: Pennsylvania
Replied: 12/15/2010
Givner & Kaye
Givner & Kaye | Bruce Givner
If he was a general partner, the answer may well be "yes."
Answer Applies to: California
Replied: 12/15/2010
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