Federal Tax Research 10th Edition by Roby Sawyers,William Raabe,Gerald Whittenburg,Steven Gill

Exercise 45

Ned Naive operated several franchised stores, and at the home office's suggestion he consolidated the stores' payroll and accounting functions with Andy the Accountant. Andy is not a CPA. Last year, Andy began embezzling taxpayer's escrowed tax withholdings and failed to remit required amounts for the four quarters. The IRS assessed Ned $10,000 in penalties for failing to make the proper withholding deposits during the year.
After appropriate research, prepare (in good form) a research memorandum to the file. (See Chapter 2 for an illustration of the structure of a tax memo.) Then write a letter to Ned explaining your findings. His address is 4567 Brainless Street, Phoenix, AZ 91234.