Will one Offer in Compromise suffice if a business owner owes both income and payroll taxes?

If the company is a sole proprietorship (i.e., not incorporated) or a Partnership the taxpayer may be able to choose whether to file one or two Offers if he owes both kinds of taxes.  It does not matter whether the company is out of business or still in business.   It is assumed that the company reports the company income on a Schedule “C” under the taxpayer’s Social Security number on his 1040 form.  If so the taxpayer can file

 

 

one Offer for the entire amount due since he is fully liable for all the taxes.   If the taxpayer obtained a separate FEIN for the company and reported payroll taxes under that FEIN, he would have the choice of filing either one or two separate Offers, although it is usually more advantageous to file only one. If he files jointly with a spouse she may not be liable for the payroll taxes if she did not work in the company and had no authority over company business.