If you are having problems paying your current payroll tax and may be experiencing pressure from the Internal Revenue Service to assert the trust fund recovery penalty.
Call us today to hear the best possible advice from former IRS agents, managers, and teaching instructors .
The IRS Trust Fund Penalty, Speak to IRS Expert, Appeals and Trust Fund Defense, Former IRS Revenue Officer.
The Internal Revenue Service considers payroll and trust fund tax serious business because in reality is it is not tax but money that was held in trust by employers.
IRS considers payroll taxes and trust fund taxes as a top priority.
I am a former IRS agent and teaching instructors with the Internal Revenue Service collection division, I am a true expert for the Trust Fund Tax, avoid and defend yourself.
As a former revenue officer and I taught tax law regarding the TRUST FUND TAX to new employees with the simple review of your case I will be able to give you a full evaluation to let you know how to defend yourself against the IRS trust fund recovery penalty.
There are no two cases the same so it is important to understand the fact pattern before one files an appeal for the trust fund case.
The revenue officer who will be making this determination will spend a number of hours before making a determination for who is responsible for this penalty.
It is extremely important to get the best tax advice events possible.
Call me today for a free initial tax consultation. Within a couple of minutes will be able to make a determination on how to proceed forward.
As a former IRS agent I would set up the trust fund penalty against responsible persons who were held liable for this tax.
I also set up hundreds upon hundreds of trust fund penalties against responsible persons and know the system inside and out.
I also know all the best tax defense strategies to use.
The IRS Form 4180
It is very important to know that one of the main forms used by revenue officers is form 4180.
The Internal Revenue Service asks the revenue officer to have a sit down meeting with any persons that will be completing this form.
As a former revenue officer, I would urge any persons who has to fill this form out to be represented so you can have the best possible tax defense.
There are many set up questions on this form.
The revenue officer tries to take this 4180 statement from as many persons that were involved with the company so as to make a clear determination as to who was truly responsible. The revenue officer uses a variety of sources to confirm that this statement is true and correct.
The revenue officer looks at bank signatures cards, copies of cancelled checks, at corporate resolutions, at loan documents, at those who sign leases or sign key documents involving day-to-day business of the company.
IRS will look for:
1. IRS will look for who determined the financial policy for the business,
2. who authorized payments or bills to 0.there creditors,
3.who opened & closed bank accounts,
4.who guaranteed loans,
5.who authorize payroll,
6.who authorized federal tax deposits,
7. who prepared and review and sign payroll tax returns,
8.who had the right to hire or fire.
At the end of the day IRS looks at where the axe falls based on the flags raised on those who had authority and control.
There is not just one factor but a number of instructors and an experienced revenue officer can get to the bottom of this real quick but keep in mind there are many tax defenses that one can raise to file an appeal against this assessment.
Also keep in mind that if this taxes assessed against you can always file an offer in compromise doubt as to liability and ask IRS them to reopen the case.
There are many 0.there documents that IRS will look at these are just a few.
It is not hard to determine who is responsible for the trust fund, the bottom line is, follow the money, follow decisions, follow who was really in charge.
If you need any help or need an initial consultation call me today and I can walk you through the process of the trust fund tax.
Why this tax is so deadly????
Many persons have no idea that if their payroll taxes are not paid that they can be held personally responsible for the tax debt, that is, the so-called trust fund taxes.
The article below will go into detail what those trust fund taxes are and the computations of assessment.
If IRS sets up the trust fund penalty against responsible persons or employees it can impose their true enforcement action including seizure, garnishments, bank levies, tax liens against any and all assets.
Our firm, Michael D. Sullivan, Former IRS Agent is your best tax defense for the trust fund tax, appeals or collection defense.
What is the Trust Fund Tax ?
A trust fund tax is money withheld from an employee’s wages (income tax, social security, and Medicare taxes) by an employer and held in trust until paid to the Treasury.
When you pay your employees, you do not pay them all the money they earned. As their employer, you have the added responsibility of withholding taxes from their paychecks. The income tax and employees’ share of FICA (social security and Medicare) that you withhold from your employees’ paychecks are part of their wages you pay to the Treasury instead of to your employees.
Your employees trust that you pay the withholding to the Treasury by making Federal Tax Deposits (PDF). That is why they are called trust fund taxes.
Through this withholding, your employees pay their contributions toward retirement benefits (social security and Medicare) and the income taxes reported on their tax returns. Your employees’ trust fund taxes, along with your matching share of FICA, are paid to the Treasury through the Federal Tax Deposit system.
The withheld part of these taxes is your employees’ money, and the matching portion is their retirement benefit. For additional information, refer to Employment Taxes and the Trust Fund Recovery Penalty (TFRP).
Employment tax deposits are a current expense. Postponing paying them is not the same as making a late payment on your phone bill or to a supplier. Congress has established large penalties for delays in turning over your employment taxes to the Treasury. The longer it takes to pay that money, the more it will cost you.
Who Can Be Responsible for the TFRP
The TFRP may be assessed against any person who:
Is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and
Willfully fails to collect or pay them.
A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes
his person may be:
An officer or an employee of a corporation,
A member or employee of a partnership,
A corporate director or shareholder,
A member of a board of trustees of a nonprofit organization,
An0.there person with authority and control over funds to direct their disbursement,
An0.there corporation or third-party payer,
Payroll Service Providers (PSP) or responsible parties within a PSP
professional Employer Organizations (PEO) or responsible parties within a PEO, or
Responsible parties within the common law employer (client of PSP/PEO).
For wilfulness to exist, the responsible person:
Must have been, or should have been, aware of the outstand ing taxes and
Eithere intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required).
Using available funds to pay 0.there creditors when the business is unable to pay the employment taxes is an indication of wilfulness.
You may be asked to complete an interview in order to determine the full scope of your duties and responsibilities.
Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.
An employee is not a responsible person if the employee’s function was solely to pay the bills as directed by a superior, rathere that to determine which creditors would or would not be paid.
Figuring the TFRP Amount
The amount of the penalty is equal to the unpaid balance of the trust fund tax. The penalty is computed based on:
The unpaid income taxes withheld, plus
The employee’s portion of the withheld FICA taxes.
For collected taxes, the penalty is based on the unpaid amount of collected excise taxes.
Assessing the TFRP
If we determine that you are a responsible person, we will provide you a letter stating that we plan to assess the TFRP against you. You have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal our proposal. The letter will explain your appeal rights.
Once we assert the penalty, we can take collection action against your personal assets. For instance, we can file a federal tax lien or take levy or seizure action.
One Way to Avoid the Trust Fund Penalty
This little known IRM code section if you are uncollectible, you can give the IRS a form 433a and ask them to impose the aforementioned code section.
1. This chapter provides guidance for Collection employees when making a collectivity determination during a trust fund recovery penalty (TFRP) investigation.
1. A collectivity determination must be made in order to determine if the TFRP should be assessed. The decision not to assess based on collectivity determination will be noted in the “Non-assertion” block of Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment, for all responsible persons against whom the TFRP is not being recommended by checking the “Responsible – not collectible (Form 9327 required for inability to pay)” box. See IRM 220.127.116.11.1(1) for TFRP case file documentation requirements.
Note: Please see IRM 18.104.22.168.2, Assertion with Pre-Assessed Form 53, for additional information.
2. The TFRP will normally not be assessed when:
• There is no present or future collection potential.
• Neither the responsible person nor their assets/income sources can be located.
4. When investigation has determined there is no collection potential, the aggregate trust fund balance is below the amount in IRM 22.214.171.124(2), Determination to Pursue and Recommend Assessment of the TFRP, and there is no potential the taxpayer will accrue additional liabilities, the Automated Trust Fund Recovery Penalty (ATFR) system case should be closed as “Under IRM 5.7.4 criteria.” Preparation and submission of Form 4183 and Form 9327, Nonassertion Recommendation of Uncollectible Trust Fund Recovery Penalty or of Uncollectible Personal Liability for Excise Tax, is unnecessary.
1. Secure Form 433–A, Collection Information Statement for Wage Earners and Self-Employed individuals, in order to determine collectivity. Form 433-F, Collection Information Statement, may be used instead of Form 433-A if the individual is a wage earner and the potential TFRP liability is less that $100,000. Exception: Although a Collection Information Statement (CIS) is not required if one was obtain within the past twelve months, current research of the taxpayer’s information is still required.
2. If the taxpayer will not complete the CIS, determine if a summons can be issued (if there are 0.there open existing assessments IRM 25.5, Summons) or if the financial analysis can be completed using the sources in IRM 126.96.36.199(2).
3. As part of the collectivity investigation, current compliance with IMF filing requirements will be verified.
Verification of Ability to Pay
1. The following instructors will be considered when determining collectivity of the TFRP:
• Current financial condition
• Involvement in a bankruptcy proceeding
• Income history and future income potential
• Asset potential (likelihood of increase in equity in assets and taxpayer’s potential to acquire assets in the future.
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