Hello,
I want to buy an S-corp that is owned by one person, the president. He has paid the taxes for his employees but not himself for 05, 06, 07. The president is not on payroll. He simply takes out the money he wants and called it distribution of profits. He tried to get these taxes filed but his accounted (who has all the receipts / info for 05, 06, 07) has not done so and refuses to answer emails, faxes and phone calls from the president. This has been going on for about a year now and the IRS is threating him with $10k fine and or jail time. He is selling the business for other reasons (debt). The question is if I buy this company am I buying the responsibility to his fines and or jail time? He is telling me no the responsibility is staying with him after the transfer of the S-corp, but I could use some advice other then his.

Thanks
Charles

This is in Massachusetts

I personally have advised my clients not to buy the shares of the S-Corporation or C-Corporation shares rather purchase the assets of corporation you are seeking to acquire. You should establish either an LLC or an S Corporation to accomplish this transaction.

As far as a liability passing onto you for the actions of a prior owner of the S Corporation, this is a legal question and I cannot offer legal advice. Suffice to say, why even take the chance? If you establish your own Business Entity, there really would not be any risk!!

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