Assessing the TFRP. If the IRS determines 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. Refer to Publication 5, Your Appeal Rights and How to Prepare a Protest if You Don’t Agree (PDF), for a clear outline of the appeals process. If you do not respond to our letter, we will assess the penalty against you and send you a Notice and Demand for Payment.
Once we assert the penalty, the IRS can take collection action against your personal assets. For instance, we can file a federal tax lien or take levy or seizure action.
What Should I Do If I Owe Payroll Taxes?
Corporations with delinquent Payroll Taxes. Businesses that are currently operating and owe payroll taxes will find that the IRS will be very aggressive with the collection process of these type of taxes.
The IRS looks at this type of payment as monies that were held in trust by your company and meant to be paid to the IRS for the benefit of the employees.
These actually are not taxes, the government has trusted the company to collect and remit these monies to the IRS. The IRS and its agents keep a watchful eye out for repeat offenders and companies that run up deficits quarter after quarter.
These companies are prime targets for the IRS. If the payroll taxes are not paid the IRS could close the company and sell off the assets of the company to obtain the payment due. The IRS could also get a copy of the company’s accounts receivable list and send levies out to all people who owe the company money.
IRS also has a special call alert system and FTD (federal tax deposits) system alert to let them know who, in their area, is behind on payroll taxes. 941 Payroll Taxes or Trust Fund Cases are one of the IRS’s top priority.
The IRS can file a Federal Tax Lien locally against the company that owes the payroll taxes. In addition, IRS may file a Federal Tax Lien under the UCC (Uniform Commercial Code), in the state capitol where the business is located.
This will affect the credit, the ability to borrow, and how vendors check on and deal with your company. With the economic downturn, many companies are going to find themselves dipping into the employee payroll taxes.
Doing this can cause a huge problem and it is only a matter of time before the IRS comes knocking at the door.
If you find yourself in this situation, our professional tax team will be able to help your company avoid forced collection from the IRS and negotiate a livable payment agreement. These are situations that you should only use a professional tax resolution company because of the high priority the government places on delinquent payroll taxes.
This never goes away until the payroll tax, Trust Fund Liability is paid in full.
The IRS will conduct an investigation and find out who is responsible for the Trust Fund Liability.
They want to find out who was the decision maker and who authorized and was responsible for paying the bills. After the investigation, the IRS sends out a letter to those individuals they found responsible.
These individuals will get a chance to appeal those findings. Once the determinations are made the assessments become final and IRS will personally go after the assets of the individuals who are responsible for paying these taxes.
If you are a responsible officer or party of a corporation that owes back payroll taxes, the IRS will look not only to the company but also to you personally for the amount due.
This is known as the Trust Fund Penalty. This will not go away until the amount due is paid. In addition, the amount owed is not discharged in bankruptcy.
The IRS will pursue you until they are paid in full from whatever source available.
