Bookkeeping liability????? Tax related

Question

I need advice. A business I have been working for is in trouble. They are a small corporation ( approx 6 shareholders) that I have been keeping the books for. I have done day to day transactions, tracked sales, bill paying, and payroll to include figuring out withholdings. I guess you could say I was the bookkeeper. They have some back taxes that have stacked up kinda high and now the state is demanding payment. I am not listed on their bank account and have not signed any checks, just prepared them. I am not a shareholder in the business, only an hourly employee. Could I be held liable by the IRS or State for these taxes? My name is on nothing and I had to bring checks to the main shareholder for signing. I did act as a general manager for the business for awhile. The shareholders were all very aware of the tax situation. There was also another owner that allowed the taxes to pile up by ignoring them and who worked as general manager and office manager before quitting and leaving me with the current mess. Any advice is helpful. Im located in Nebraska.

Answer 1

You won't be held liable but the shareholders would be.  They need to get these figures paid ASAP to avoid any penalties with the IRS or the state of Nebraska.  

And if they don't want to pay, they could be subject to tax evasion and/or tax fraud charges, if reported.

Answer 2

The potential liability you are inquiring about is, on the federal level, the trust fund recovery penalty.  Any responsible person who willfully fails to pay over withheld taxes can be held liable for the penalty.  Willful in this context does not mean evil but just that they knew the withholding taxes were due and used the money to pay other bills.  As long as you don't have your fingerprints on the checkbook, you are just the bookkeeper and have no authority to pay one bill or another.  States have similar laws.  If IRS interviews you, consider yourself a witness and not a suspect. Considering the future outlook for this business is poor, you should start looking for another job.  

Answer 3

While the IRS will probably look at you (via a form and an interview) as a potential responsible person, the fact that you did not have check signing authority will almost certainly get you off the hook.  I am not familiar with the state rules where you live, but in other states where I have had clients the ability to sign checks is an important factor in deciding if you are liable.

Answer 4

Since you are not an owner of the business, you are not liable for the business taxes.  As the general manager, there may or may not be some other issues, such as knowingly aiding the non-payment, but I know of no way you could be held liable for taxes.

This is not legal advice