IRS Payroll Tax Problems: Are You a Responsible Party Liable for the Trust Fund Recovery Penalty?
In a time when the government is desperate for revenue, it is very important for business owners to stay on top of their payroll taxes game to avoid IRS payroll tax problems.
For those who may not be familiar with payroll taxes, unpaid payroll taxes are considered “trust fund taxes” because the employer’s failure to pay payroll taxes is equated to holding the employee’s money in trust until a federal tax deposit is made in that amount. Consequently, the IRS is more aggressive when collecting past due payroll and business taxes and more often than not, will penalize you with the Trust Fund Recover Penalty.
In recent news, a woman was penalized under the Trust Fund Recovery Penalty for deliberately failing to pay employment taxes. Since it was evident that she had knowledge of the unpaid employment taxes but still failed to pay, she was held liable for the Trust Fund Recovery Penalty.
You can also read about the Biggest Mistakes Small Businesses Make When Faced with Delinquent Payroll Taxes and IRS Penalties.
CCH (http://intelliconnect.cch.com) reports:
President Was Responsible Person Liable for Unpaid Withholding Taxes
The president and CEO of a medical services corporation was not entitled to summary judgment that she was not a responsible person liable for the trust fund recovery penalty. The individual signed Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Tax, stating she performed duties and functions including directing or authorizing bill payment, signing corporate checks and authorizing payroll checks.
Although the individual’s ex-husband, the corporation’s CFO, testified that he had exclusive control over the corporation’s payroll and was responsible for setting aside income and FICA withholdings, the individual could not be absolved of her legal obligation to ensure that the trust fund taxes were paid by delegating her authority to another. Further, the individual acted willfully because she knew that the trust fund taxes remained unpaid when she signed the Form 4180, but continued to make payments to creditors other than the IRS.
Even if you are not in direct control of your employment taxes, you can be held liable for unpaid payroll taxes or other business taxes if you’re in a position of authority in your company. Make sure that you carefully examine each tax return before approving it. Once your signature is on the tax return along with any payments made, you are legally bound to any IRS penalties that’s connected to the tax return.
If you have found yourself in IRS crosshairs for unpaid payroll taxes, you can get tax help from a tax attorney, CPA, or Certified Tax Resolution Specialist. Oftentimes, a tax professional can help you get a penalty abatement or IRS installment agreement.
You can also learn more about the Trust Fund Recovery Penalty from the IRS website.
Tax Resolution Services is a team of expert tax attorneys, CPAs, and Certified Tax Resolution Specialists. Call our office today at 1-866-477-7762 for a free tax resolution consultation or visit www.taxresolution.com.
More Tax Help, IRS News and Tax Relief Tips:
- Release Your IRS Bank Levy: How a Tax Attorney or Certified Tax Resolution Specialist Can Give You an Advantage
- Your Unfiled Delinquent Tax Return Checklist: Stop the IRS Now and Avoid Steep Interest and Penalties from Accumulating
- Tax Help For Taxpayers Short on Cash: Filing a Tax Return Late is Better than Filing a False Tax Return
- Retire Your IRS Back Taxes Forever: How Tax Resolution Services Helped Save a Taxpayer $130,000
- Tax Help For Offshore Account Holders as Swiss Government Seeks to Salvage UBS Agreement
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