The IRS And Dormant Companies

Until fairly recently, you could easily start a corporate or LLC business (often based in Nevada) and get a unique tax number ID, and let it simply be idle. If one did not conduct any business, they did not have to file a tax return annually. In the past, lots of people did not file any tax returns for dormant entities.

This article is my opinion and is not, legal advice. I’m a judgment referral expert, and not a lawyer. If you ever need legal advice or a strategy to use, you should contact a lawyer.

When the economy began to decline and the biggest customers for my consulting business folded, I then decided to shut down my class-C corporation. Where I live, it cost nearly $ 2,000 each year to keep my C-corporation going, primarily due to having to pay State taxes and paying my accountant to complete my company tax returns. When income is down, it’s costly to keep corporations going.

Long ago, our prospering economy let the Internal Revenue Service focus mostly on income-earners. Many people used to set up corporations or LLCs, and then just let them sit. Even when people got a tax number ID for their LLC or company; if they did not do any business, they did not file any tax returns; and in the past, the Internal Revenue Service paid no attention to them.

For more than a few years, the Internal Revenue Service has charged a penalty for not filing tax returns. The fine charged varies with the type of entity is filing. In 2010, the Internal Revenue Service substantially increased their penalty fees.

The Homeownership and Business Assistance Act of 2009 (Public law 111-92) raised the penalty for failure to file S-corporation and partnership tax returns (LLCs taxed as S-corporations or partnerships). The filing late penalty was raised from $ 89 per partner or shareholder to $ 195 for each shareholder or partner for every partial or full month, that a business-related tax return was not filed on time.

People with a “dormant” company registered somewhere for many years, are now getting hit with massive fines, even if their company didn’t earn a dollar. Sometimes they did not even open a checking account, however they or their attorney, or a online site got them a tax number ID for their business, so they now must file a tax returns on time or they will owe the Internal Revenue Service for penalties.

When you own an LLC, a C or S-corporation, irrevocable trust, or a limited partnership with a tax number ID; you must file a tax return for your tax ID number every year. It does not make any difference if you owe any taxes or do any business; the tax return must be filed.

The IRS is really serious about their fines. The IRS has three times as many agents as they had just a few years ago, and they are now attempting to pinch absolutely dollar. There seems to be no way to avoid owing fines for those not filing on time, even for people that can’t afford them.

When you have a dormant company-related entity, deal with it now. If you bring it to the IRS first, the Internal Revenue Service might be willing to cooperate with you to work out your dormant tax-number ID company circumstance.

Mark Shapiro of: http://www.JudgmentBuy.com – The easiest and fastest way to find the best professional to buy or recover a judgment.

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