View Single Post
Old 16th March 2008, 02:46 PM   #1
PacSun
Member
 

Join Date: Mar 2008
Posts: 2
Default California State Wants Money! Help!



Please be kind as this is going to sound stupid.

Back in '04, I started an S Corp that performed professional house cleaning services. According to my Accountant, I did not have to pay estimated taxes until the end of the year. During '04, the Corp never made any money even on a quarterly basis, in fact it lost money. For reasons that escapes me now, I did NOT file the Corp's '04 & '05 Income Taxes to the State of CA nor the IRS. I remember thinking the Corp was loosing money fast and I was working hard trying to save it so I procrastinated on the taxes. Big mistake! Six months into '05, after getting beat up with the excorbitant Worker's Compensation Insurance premiums (47% of payroll), the S Corp ran out of money and I basically closed shop. I tried to close the S Corp down but the State wanted confirmation from the CA State Board of Equalization and the IRS that the Corp did not owe any money. When I tried to get that confirmation, the State Board of Equalization suddenly came down hard and sent the Corp a letter stating I needed to file State Taxes for '04 and '05. I complied. Since the Corp did not make any money, I figure that was the end of that. Wrong! This was back in 2006. After I sent the State Board the paperworks showing a loss of income in all of '04 and the 2nd half of '05, they came back with a demand for payment in 2008! Basically, they sent the Corp a letter stating I owed them estimated taxes for both years, plus penalties, all amounting to $4,500!

I admit to making a mistake by ignoring to file Income taxes for '04 and '05. Big mistake. I have no excuse except stupidity. But this new demand for payment is vexing me. How on Earth is the Corp. suppose to pay this tax when it never made enough money to begin with? I ran the S Corp out of my house so the State Board has been sending the mail for the Corp. there. But the Corp has no assets to speak of. It has no bank account, no property, nothing. I personally am unable to pay this amount using my own personal finances either. I would have to sell my car then how am I suppose to go to work?

Any advice on what to do?

PacSun is offline   Reply With Quote
Register or log in to remove this ad.