Tax Procedure: A Minority Shareholder Is Responsible For Corporate Taxes Following the Majority Shareholders’ Fraud

Transferee liabilityWilliam Kardash was a minority shareholder in a Florida company involved in the construction industry; the majority shareholders were skimming cash from the company, apparently without his knowledge or complicity. Kardash wound up with a significant tax bill for the company’s taxes, as the Eleventh Circuit ruled that he was liable as a transferee under section 6901 of the Internal Revenue Code and applicable state law. Kardash v. Comm’r, No. 16-14254, 2017 U.S. App. LEXIS 14389 (11th Cir. Aug. 4, 2017).

Transferee liability represents one of several theories that the IRS can use to hold one person liable for another person’s taxes.… Read More

IRS Collections: Son-of-BOSS and a Sham Divorce, a Tax Lien Soap Opera

son-of-bossSome people will go to extraordinary measures to avoid paying their taxes. Recently, the First Circuit addressed a case where a business owner attempted to use a Son-of-BOSS tax shelter to avoid paying tax on gains from the sale of several fitness centers; when that did not work, he and his wife entered into a sham divorce, using the property settlement as a means to shelter assets from the IRS. United States v. Baker, No. 16-1415, 2017 U.S. App. LEXIS 5234 (Mar. 24, 2017). The Court of Appeals had to unravel a complex web of transactions to determine what property owned by the couple was subject to a federal tax lien.… Read More