For businesses delinquent on their payroll taxes, the Trust Fund Recovery Penalty is a powerful tool the IRS has at its disposal. Basically, if Trust Fund taxes aren’t properly withheld, accounted for, or paid over to the IRS, they can make a “responsible person” personally liable for the tax. What is especially frightening to taxpayers is that the IRS can determine that there is more than one “responsible person” to collect the tax from.
If you need a professional to represent you before the IRS in a Trust Fund Recovery Penalty case, feel free to contact us at (720) 507-1829 to set up a consultation to go over your tax matter.
Trust Fund Taxes
Trust Fund Taxes are generally payroll taxes – the tax that employers are supposed to withhold from employees’ paychecks. Most commonly, these include Federal Insurance Contributions Act (FICA) taxes such as Social Security and Medicare as well as the amounts withheld for the federal income tax.
Trust Fund Cases
The IRS is very serious about collecting these Trust Fund taxes. In these case types, a Revenue Officer will be handling the investigation, often conducting interviews with business personnel to determine the responsible person. The Revenue Officer will also be requiring many corporate and financial documents from the taxpayer, such as bank statements, deposit slips, check ledgers, etc. At every step of the process, a Revenue Officer will be looking to both determine and prove who is a responsible person.
Once the Revenue Officer has made a determination, the Officer will issue a proposed assessment against of the Trust Fund Penalty against a taxpayer. This notice of determination will contain a right to appeal the decision to IRS Appeals. It’s important to address the Penalty as early as possible before the assessment of the Penalty.
Once the penalty is assessed, the IRS has 10 years to collect from the taxpayer and the Trust Fund Penalty is not dischargable in bankruptcy. At this point, the taxpayer’s options are very limited. Taxpayers who have missed the Appeals deadline or who received an adverse ruling at Appeals can file a refund suit in Federal Court after an initial request for refund is denied by the IRS. Only licensed attorneys can represent taxpayers at this stage.
If you have a Trust Fund Penalty investigation or assessment, feel free to contact us at (720) 507-1829 to go over your tax matter with you.