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Injured? Someone still needs to pay the taxes.

If you get hurt and you're the only one who knows how to do payroll, pay the taxes and keep the books going, you're going to be in big trouble. Why risk it? Hire a bookkeeper to look after the basics.

Check out this example of an actual case, from the current issue of The General Ledger from the AIPB.

The case: For more than 2 years, C Corp failed to timely file employment tax returns and related taxes. The IRS assessed the taxes plus penalties and interest. C Corp filed suit for a refund of penalties and interest, claiming reasonable cause for its delinquency.

Held: For the IRS. The taxpayer’s president had normally handled employment taxes. When he fell and was injured, he was unable to handle many responsibilities for a while. The employee who handled employment taxes in his absence had problems with the company’s software. The president could not point out any mistakes or deficiencies in the software—only that the employee had difficulties using it.

Failures by someone assigned employment tax responsibilities are not reasonable cause for late filing or payment. How prudently that employee was chosen or how competent he or she appeared to be is irrelevant. The employee’s shortcomings or mistakes are the firm’s shortcomings or mistakes.

Although the president’s injury might be reasonable cause for filing his personal taxes late, it was not an excuse for the corporation’s delinquency. A corporation is a separate taxpayer and it was not disabled. [All Stacked Up Masonry Inc. v. United States, No. 1:20-cv-00161 (Fed. Cl. 2020)]

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