Payroll Tax

Payroll Tax problems are a nightmare!

Payroll taxes are the number one reason why businesses get into trouble with the IRS. Employers are responsible for withholding income and employment taxes from an employee’s wages. The employee’s money is held in trust until the employer makes a federal tax deposit in that amount. Trust Fund Recovery Penalty (TFRP) is a hefty fine charged for an employer knowingly or willfully keeping employee FICA and income taxes owed to the IRS. The amount of penalty is equal to the unpaid balance of the trust fund tax!

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. This 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,
  • Another person with authority and control over funds to direct their disbursement,
  • Another 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 willfulness to exist, the responsible person:

  • Must have been, or should have been, aware of the outstanding taxes and
  • Either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required).

Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.

You may be asked to complete an interview know as the 4180 Interview in order to determine the full scope of your duties and responsibilities.

Do not go into this interview alone!

Contact Resolution Tax immediately!

  • Step 1: Analyze the assessment and resolution options
  • Step 2: Prepare a protest and build your case when challenging personal liability
  • Step 3: Build a strategy to resolve your payroll tax issue quickly and efficiently