Trust Fund (Payroll) and Tax Delinquency

The Trust Fund Recovery Penalty (Payroll Tax Problem)

“Trust Fund” portion of the payroll tax liability includes the employee’s tax withholding as well as their portion of Medicare and Social Security (FICA) tax withheld.  In addition to the company being held liable, the responsible person will also be held personally liable if the tax liability remains unpaid.  If you are deemed responsible, you may be forced to personally pay for any shortfall that exists.  A person may be deemed responsible regardless of the type of entity under which the business operates including LLC’s and sole proprietorships.

The most serious of tax problems is the failure to collect, account for, and pay to the government any taxes that were, or should have been, withheld from employees. If the IRS and State have determined that any person or persons that “willfully” chooses to not pay payroll tax liability is deemed a “responsible person”.  What this means is that a responsible person is personally liable for the Trust Fund portion of payroll taxes withheld from employees’ pay. They are so aggressive to recover this fund since it deems belong to government and you had collected the fund on behalf of government but kept it for yourself. They not only shut down business and seize all of its asset but also goes after properties of all responsible persons.

Keep in mind that there may be more than one responsible persons for payroll tax liabilities and they not need be a business owner.  A responsible person may be anyone including a CFO, payroll manager or bookkeeper.  They may also be considered to be responsible solely because they are listed on the company’s bank signature card.

It is important that you act quickly if you have not yet been deemed a responsible person.  If we can get you “off the hook” personally, it will greatly work in your favor when looking at the overall picture as it relates to your tax matters.  If you have been deemed responsible prior to coming to us, there are ways we can keep the IRS from coming after you personally.

Unfiled Returns

By law, failing to file your tax returns is a criminal offense. If you do not file, you can be prosecuted and punished, possibly with jail time. The guidelines are one year for each year not filed. Why risk potentially losing your freedom for failing to file your tax returns! So many criminal syndicates are serving time for this tax offense while the states cannot prove in court any other criminal activities.

If you wait for the IRS or State to file your returns for you, they will be prepared in the best interest of the government – not your interest. IRS will not include exemptions, deductions, or credits that you could reduce the tax amount.

Generally, we can prepare and file delinquent returns avoiding exposure to such harsh penalties. In some cases, the IRS has prepared a return for you and assessed the tax based on that return. These IRS-prepared returns will have all the income items IRS knows about, but will not include deductions, exemptions, or credits you are entitled to claim. Therefore, the tax assessed based on the IRS-prepared return will generally be higher than the amount we determine considering appropriate deductions, exemptions, and credits.

We will prepare your tax with the lowest liability and having your IRS record amended. If there is a balance due after correcting the IRS records, we will represent you before the IRS to resolve that in the least intrusive manner available.