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individual income tax payments

hmasini
Level 1

One of my clients is the owner of a S corporation. he wants to use the corporate banking information to pay his individual income tax liability on his form 1040. if i enter the corporate bank accounts numbers, routing info etc will the payment be accepted by the irs. or will they try to match up an identification number and reject it

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4 Replies 4
TylorValdez1
Employee
Employee

The IRS will gladly take payment regardless of which bank account is being used. I have not seen where a return is rejected for the reason you have outlined.

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qbteachmt
Level 15

The 1040 has the SSN; the corporate bank account should have the FEIN.

And remind this person that what they are proposing is called Piercing the Corporate Veil. If they don't intend to honor that the corporation and themselves are separate entities, why should any lawyer or attorney pursuing legal action against either one? They are pretty much bypassing the reason to form a corporation to protect their personal issues from corporate.

Here's an example:

The corporate has lots of money in the bank, and the person gets sued personally (or vice versa). If he is willing to commingle banking by using Corporate resources to pay person costs, then those funds become available in the case of personal liability, too.

Not to mention if there are other shareholders, the distributions should be pro rata for them, as well.

Remind him: the corporation is not your Personal Piggy Bank.

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sjrcpa
Level 15

S corp shareholders are allowed to take distributions. Many shareholder agreements in fact call for tax distributions, which is what this is.


ex-AllStar
qbteachmt
Level 15

Or, the shareholder considers that the 1120S is the reason they owe so much, so let the Business pay, and that makes it Business Expense. I've seen this lots of times.

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