Greater Corporation acquired all of the stock of Lesser Corporation in 2009 and
ID: 2367720 • Letter: G
Question
Greater Corporation acquired all of the stock of Lesser Corporation in 2009 and the entities have filed a state and federal consolidated income tax return ever since. In 2012, an audit notice from the state unemployment tax administration makes it clear that Lesser underpaid its 2010 state and federal payroll taxes by 2 million. Lesser cash flow at this time is poor, and it has insufficient funds to pay the delinquent amount plus interest and penalties. Can the state revenue agency collect the outstanding payroll tax from Graeter under the Federal "Joint and several liability" rule for tax obligations of consolidated return affiliates? Explain. Please give me a detailed explanation because I will have a 5 minute presentation about this question. It is chapter 8 of the South Western Federal Taxation 2013 edition, question 5, page 8-42. Thanks in advanceExplanation / Answer
Internal Revenue Service (IRS), agency of the U.S. Department of the Treasury, originally established in 1862, responsible for enforcing the internal revenue laws. The IRS is administered by the commissioner of internal revenue, who is appointed by the president with the consent of the Senate. Its main functions are to encourage voluntary compliance with the tax laws and regulations by providing information and assistance to taxpayers and to take action where necessary and appropriate to enforce the laws. Revenues are collected through individual income taxes; corporationtaxes; excise, estate, and gift taxes; and social security taxes.
The IRS is divided into three organizational levels: the national office, the regional offices, and the district offices. The national office in Washington, D.C., is responsible for nationwide policies and programs and for the direction of the field organization. The office of the commissioner supervises the assessment and collection of all taxes imposed by law. The commissioner is assisted by a deputy commissioner; a chief counsel who provides legal services; and eight assistant commissioners, who each oversee a functional area, including taxpayer service and returns processing, compliance, and inspection.
Most IRS personnel are assigned to the field organization. There are seven regional offices, each headed by a commissioner, that supervise all field operations. The regions are divided into 62 districts, administered by directors. The district offices collect taxes, ascertain delinquent and additionaltax liability, investigate violations of internal revenue laws, and aid the public in preparing tax returns. Ten service centers also process tax returns and maintain records of taxes collected.
In 1997 and 1998 the IRS became the subject of dramatic congressional hearings. Several taxpayers testified that the agency had persecuted them for years for taxes that they did not owe. Some former IRS agents told Congress of questionable management practices within the agency. Some agents claimed, for example, that IRS managers set quotas for the collection of back taxes, which led some agents to use very aggressive collection tactics in an effort to meet the quotas. In mid-1998 the House and the Senate each passed bills that would curtail many of the abuses and give taxpayers more rights in disputes with the IRS. The two chambers then tried to work out differences between the two bills so they could approve a final bill and send it on to the White House.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.