Legal Question in Business Law in California

I filed 2008 tax returns late for an S corporation and an LLC. Both business's failed in 2008 due to the economy and had to be closed. I just received notices from the IRS for each of those businesses of late filing penalties of approx. $2000 each, but there is no income or even bank accounts for either business anymore. My husband and I were both officers (or members) of both companies. Are we personally liable for these amounts?


Asked on 12/03/10, 2:13 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

First, let me say that these seem to be large penalties for mere late filing....is it possible that the amounts include unpaid or unreported amounts due as well?

Both an "S" corporation and many (but not all) LLCs are pass-through entities, where the stockholders (S corp.) and "partners" (for an LLC that has elected partnership [1065] taxation) pay the taxes based on what the entities report on schedules K-1. So, the shareholders and members ("partners") are probably liable for actual taxes due, plus penalties and interest, pro-rata to their ownership stakes.

However, if the sums due relate solely to late filing, and no taxes would have been due if the returns were filed on time, I'm not sure what the correct answer is, and your best bet in such a case is to ask the IRS to answer your question. They have the benefit of having all the entities' prior filings including the 2008 returns available to look at, and I don't.

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Answered on 12/08/10, 2:35 pm


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