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Can the IRA of an individual officer of a class "c" corporation be attached by the IRS for the corporation's taxes?


Expert Cory Bunger's Answer:

Holding an individual liable for a corporation’s taxes is not common, but it is possible.  It most often occurs with past due payroll taxes.  When a corporation fails to pay payroll taxes, the IRS can assess a Trust Fund Recovery Penalty on anyone who is considered to be a "responsible person" for paying the taxes.  The IRS defines a "responsible person" as any person who:
    1)  is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and
    2)  willfully fails to collect or pay them.
    3) a corporate director or shareholder,
    4) a member of a board of trustees of a nonprofit organization,
    5) another person with authority and control over funds to direct their disbursement, or
    6) another corporation.
    In addition to payroll taxes, an individual can be held personally liable for corporate liabilities if the privilege of conducting business in the corporate form is being abused.  This is commonly referred to as piercing the corporate veil.
    The corporate veil can be pierced by commingling personal funds with corporate funds, inadequate capitalization at the time of formation, or committing fraud on existing creditors.
    Once the IRS has determined that they will hold you personally liable for corporate liabilities, they are able to come after your personal assets (including IRAs). 

Cory Bunger, CPA

North Carolina

17 yrs experience

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