SCorp frequency of Officer Payroll

[BHoffman]

Interesting TC case:

http://www.ustaxcourt.gov/InOpHistoric/Ry2an.SUM.WPD.pdf

IRS seems to be ramping up on the frequency of SCorp officer payroll checks. This case found in favor of the taxpayer due to his taking advice from a CPA. I find nothing to indicate that IRS or AK state board punished the CPA for erroneous advice.

[veritas]

The upshot is

The payroll taxes were not paid on time. And the penalties were removed because the taxpayer relied on the advice of his accountant.

So the correct answer is advances on compensation do give rise to a payroll tax liablity at the time of the advance. I haven't read the Circular E for sometime but I do believe it addresses this issue.