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PAYROLL TAXES PAYABLE
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2013
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| PAYROLL TAXES PAYABLE |
NOTE 8 - PAYROLL TAXES PAYABLE
In
2009 and 2010, REGS became delinquent for unpaid federal employer and employee payroll taxes and accrued interest and
penalties related to the unpaid payroll taxes. Additionally, REGS had amounts outstanding for certain unpaid state payroll
taxes and accrued interest and penalties applicable to 2012 and 2011. All interest and penalties related to the delinquent
federal and state payroll taxes are included in the section labeled “other income and expenses” in the
consolidated statement of operations. Additionally, the IRS has filed a notice of federal tax lien against certain of our
assets to satisfy the obligation. The IRS is to release this lien if and when we pay the full amount due.
In September 2011, REGS received approval from the IRS to begin paying our outstanding federal payroll tax and related interest and penalties liabilities totaling approximately $971,000, for the aforementioned years in installments (the “Installment Plan”). Under the Installment Plan, we were required to pay minimum monthly installments of $12,500 commencing September 2011, which increased to $25,000 per month in September 2012, until the liability is paid in full. Through the duration of the Installment Plan, the IRS continues to charge penalties and interest at statutory rates. If the conditions of the Installment Plan are not met, the IRS may cancel it and may demand the outstanding liability to be repaid through a levy on income, bank accounts or other assets, or by seizing certain of our assets. Additionally, the IRS has filed a notice of federal tax lien against certain of our assets to satisfy the obligation. The IRS is to release this lien if and when we pay the full amount due. Two of the officers’ of the Company also have liability exposure for a portion of the taxes if REGS does not pay them.
In May 2013, the Company filed an Offer in Compromise with the IRS to reduce its outstanding liability to $250,000. While the Offer in Compromise is under review by the IRS, the Company requirement to pay $25,000 a month under the Installment Plan is suspended. There can be no assurance that the Offer in Compromise will be accepted by the IRS.
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