A taxpayer has a scheme to avoid paying overdue taxes backfires for a corporation.
On the day a company that owed back payroll taxes decided to close shop, its president and 40% owner formed a new firm to conduct the same line of business with the same workers.
His wife owned the new firm on paper, but she wasn’t active in the business and lacked the requisite industry experience. He had an office there and essentially ran it. IRS treated the new company as a continuation of the old and levied its bank accounts to satisfy the overdue taxes.
A federal appeals court, relying on applicable state law, agreed and upheld the levy.
Also my understanding is that the owners remain personally responsible for any unpaid trust fund monies not paid promptly to the government, along with all penalties and interest, even if the company goes out of business. There will also always be the issue of willfulness on payroll taxes.
Eriem Surgical, 7th Cir.)