NC Corp tax rolling onto owner?

[erchess]

Single owner S Corp owes back state taxes. Specifically it's the Annual Report and Franchise Taxes not income taxes plus of course P&I. My client is destitute at this point so it isn't like he has money they can seize from bank accounts but he does own a house free and clear and some beat up old vehicles as well as a recently made Porsche. He can't afford tags for the Porsche so he can't drive it and I think he should sell it but oh well.

The Revenue Officer who has the case is threatening to roll the tax debt onto the individual owner. Can they do that? Can they seize his house or the Porsche? I thought corporate debts other than payroll taxes were debts of the business and could not roll over onto the owner(s) unless of course there was a loan contract that specified otherwise.

He recently came out of a bankruptcy in which he walked away from a ton of debt so I don't know what his prospects would be for getting a loan given that his income is low and sporadic. His income is starting to pick up so if he could get the loan I believe he could pay it back.

[Corduroy Frog]

Loser

Erchess, states seem to assume powers for themselves that they would never tolerate among their subjects. They can probably get away with this, and even if this were illegal your client would have to get a lawyer to stop it. If he has been destitute, he probably can't afford a lawyer.

Wheels of the rich and powerful bulldoze those who do not have or cannot afford representation.

[JohnH]

Your client may need to get a legal opinon, but I think the Revenue Officer is blowing smoke. Ive never seen a sitation in which NCDR collected a penny of Franchise Tax or Income Tax unless the corp paid up in an effort to reinstate. Most times the corp folds, it gets a revenue suspension notice, and eventually the charter is dissolved by the Sec of State. Everybody goes along their merry way, and all is forgotten.

That isn't to say that some aggessive collector won't try to bulldoze him into paying, but I don't think they can do it. You might also want to find out if the collector is an emplyee of NCDR or if they are an outside agency. An outside agency might not know the law as well, or might not care, so you might need to bring them up to speed. Maybe you should just call NCDR in Raleigh and get someone on the line who can give you a straight answer.