Check Out Funny Quotes and Get Tips on Staying on Top of Taxes

Transferring assets to other people can be tempting when you owe back taxes – you might think that putting assets in your children's, spouse's, or a friend's name will prevent the IRS from seizing those assets. Or if you're dealing with a corporation, it might be tempting to make large payments to shareholders or to transfer everything to another corporation. 

A lot of entrepreneurs set up their businesses with specific structures designed to limit their liability for business debts and lawsuits. However, there's always a risk that you may face personal liability for business taxes or other debts, regardless of the structure of your business. This post outlines when you may face personal liability for business taxes and how to minimize the risk. 

If your business has unpaid payroll taxes, the IRS will investigate to find responsible parties to assess the Trust Fund Recovery Penalty (TFRP) against. The agency can assess this penalty against business owners, managers, and even employees – and once it's assessed, your options become much more limited. 

If you pay an independent contractor, you generally just cut them a check or send another type of payment, and then, at the end of the year, you give them a 1099 form noting their total payments for the year. Similarly, if you pay dividends to a shareholder, you just send them a payment and let them worry about the taxes.