Payroll Tax Problems
Trust Fund Recovery Penalty
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Taxpayers can be held personally liable for certain unpaid federal employment taxes through the Trust Fund Recovery Penalty (“TFRP”). Section 6672 of the Tax Code authorizes the IRS to assess the penalty against any taxpayer who: (1) is responsible for collecting or paying employment taxes; and (2) willfully fails to collect or pay the employment taxes.
Prior to assessing the TFRP, the IRS initiates a TFRP investigation. Through this investigation, the IRS interviews individuals associated with the business to determine whether they may be subject to the penalty. If the IRS determines that the TFRP penalty applies, a proposed assessment will be issued against the taxpayer. The taxpayer has 30 days to file an administrative appeal to challenge the proposed assessment. If the appeal is not successful, the taxpayer can only further challenge the assessment by paying a portion of the tax and suing for a refund in federal district court or the U.S. Court of Federal Claims. IRS Publication 784 summarizes the TFRP process. Our CPA are experienced in representing taxpayers facing the Trust Fund Recovery Penalty. We invite you to contact us to schedule a consultation with a CPA who can evaluate your case.
There are plenty of myths related to payroll tax problems with the IRS. One of the biggest ones consists of who is responsible for the payroll tax problem? Unfortunately, the IRS views a payroll tax problem as the worst type of tax liability to owe. The IRS will try to assess liability for the payroll taxes owed from as many people as possible. This includes but is not limited to all owners, officers, bookkeepers, spouses, and even the secretary who passes out the payroll checks.
Fortunately, TAX REP PROS LLC have been extremely successful in limiting the liability for many who are experiencing payroll tax problems. For example, we’ve helped various clients that owed hundreds of thousands of dollars to the IRS in payroll tax problems, which were initially declared “currently non-collectible.”
When helping a taxpayer with a payroll tax issue, one of the first courses of action is
bringing the taxpayer into compliance by directing him or her to hire a payroll service, such as ADP. The reason we do this is to prove to the IRS that the taxpayer is showing good faith. If the taxpayers are already compliant or their companies are closed and have payroll tax problems, they become collection actions from the IRS. In most cases, a payment plan suitable for tax relief is implemented by TAX REP PROS LLC, based upon our keen ability to understand the right IRS tax code.
We cautiously advise that taxpayers should never deal with the IRS on their own concerning a payroll tax problem. The reason behind this is the IRS has to conduct a trust fund recovery interview with the taxpayer. They ask very complicated questions to access liability to as many people as possible within the company. Answering these questions requires a great deal of skill and knowledge of the IRS laws.
We have successfully stopped the IRS from closing any of the companies that we represent. This is imperative to know because in most payroll tax problems, the agent assigned to the case will immediately start seizing the company’s assets. These assets include but are not limited to accounts receivables, credit card merchant accounts, bank accounts, equipment, fixtures and furniture. This usually means the company has to close its doors. If there is still an outstanding balance on the payroll taxes, the IRS begins collections on responsible individuals. In other words, the IRS will begin actions, such as wage garnishments, bank levies and the seizure of cars and properties