As the sole shareholder of an S-Corp, is it my responsibilty to file the corporation's taxes?

June 5, 2012 5:27 PM

Please help me settle a debate... who is responsible for filing a corporation's tax forms, a sole shareholder or an officer?

A few years back, my dad and I set up an S-Corporation in IL. I was the only one named as the officer(s) and shareholder. After about a year of inactivity, I wanted to get out of it because the legal responsibilities frustrated and stressed me out. The business wasn't doing anything, but I constantly felt like I was going to be fined for not fulfilling some legal requirement. So at the time of renewal, we switched the officer positions to my step-mom.

Now (a few years later), they've actually got the business going and making some money. However, they never spread out the shares to other family members as originally planned. My step-mom thinks that because I'm the sole shareholder, I'm the owner and responsible for the corporation's taxes. She asks me to sign this and that. I finally convinced her that as a shareholder, I should only be responsible for filing form Schedule K (based on the corp's taxes) with my personal tax returns. However, I'm back to square one, because now she wants me to submit a late filing waiver request letter to the IRS for the corporations tax form 1120S, again as the "owner".

Who's right here? As the sole shareholder, am I the owner and thus responsible for filing the corp's tax forms? Or isn't that the officer's job?

posted by Swede78 to law & government (5 answers total)

It's an officer's job as only they can sign such things, but if the officers won't it's the responsibility of the shareholders to call a shareholder meeting, fire the officers and install new ones who will fulfill their duties to the corporation.

So, if you can't work it out with her you'll have to.
posted by michaelh at 5:35 PM on June 5, 2012 [2 favorites]

Your other obligation is to hold a regular shareholders' meeting.
posted by michaelh at 5:36 PM on June 5, 2012 [1 favorite]

I think you should talk to a lawyer about this.
posted by Chocolate Pickle at 7:59 PM on June 5, 2012 [1 favorite]

The structure is:

The shareholders elect directors.
The directors appoint officers - president, vice-president, secretary, treasurer, others as they choose.
The officers may employ others to carry out the company's business.

All are responsible for tax compliance. The directors are primarily responsible, but in the event they do not act, others have to respond. If they do not, the remedy is not to walk away. The remedy is to replace them.
posted by yclipse at 8:09 PM on June 5, 2012 [1 favorite]

Tax compliance is part of a company's regular course of business, so I say it's management's responsibility, but they're acting on your behalf, so it's ultimately on you to make sure it gets done. Governance includes oversight of management's responsibilities, so if they're not performing their duties, you fire them and appoint someone else.

Why not resolve the issue by hiring a competent accountant?
posted by sillymama at 9:13 AM on June 6, 2012