Legal Question in Business Law in California


I am thinking of a business model which involves collecting income tax payable from people, saving it for them, and paying to IRS on their behalf. The closest example is an escrow account for property tax and home insurance collected on mortgage payments.

I want to know if this could have any legal issues? Does IRS allow third parties to collect and pay tax on other peoples behalf?

Asked on 8/08/17, 8:51 pm

1 Answer from Attorneys

Timothy McCormick Haapala, Thompson & Abern, LLP

Sure. It's called employer payroll withholding. I'm unclear on why people would have you do that though. If they're being under-withheld all they have to do is change their employer withholding. In addition, you would be required to pass it on to the IRS monthly. So not sure how you make money of this. You would also need licensing as an escrow company.

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Answered on 8/08/17, 11:42 pm

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