Failure to pay employment taxes to the IRS can result in imposition of the Trust Fund Recovery Penalty. The IRS can assess and attach the personal assets of the business’ owner and those involved in managing the business for the penalty.
At Daniel Rosefelt & Associates, LLC, Attorney & CPA, we vigorously represent people threatened with tax penalties, assessments and levies. Our team has substantial experience representing employers, and their officers and owners, in payroll tax cases.
When representing you, we will work diligently to develop a tax debt solution designed to protect your business and your personal assets. This could include the negotiation of a payment plan with the IRS, an Offer in Compromise, a voluntary settlement under VCSP, or another solution to the problem. Our firm is also experienced in defending business entities against forcible collection action initiated by IRS revenue officers as well as other related payroll tax problems.
What Are Trust Fund Taxes?
The Internal Revenue Code requires every employer to withhold Social Security taxes, Medicare taxes and income taxes from the wages of its employees. The portion of Social Security and Medicare taxes withheld from the employees’ wages, along with an additional contribution of Social Security tax made by the employer, are commonly referred to as “payroll taxes” or “employment taxes.” The combination of payroll taxes actually withheld from an employee’s wages (net of the employer’s contribution), plus the income taxes that are actually withheld from an employee’s wages, are collectively referred to as “withholding taxes” or “Trust Fund Taxes.” The term Trust Fund Taxes is used because these taxes are theoretically held in trust by the employer until paid over to the IRS in the manner described below.
Employers’ Obligations Regarding Payroll Taxes
Under the Internal Revenue Code, an employer is required to collect, account for and pay taxes that are withheld from employees’ wages. These withholding or Trust Fund Taxes, along with the employer’s share of Social Security tax, are supposed to be deposited in a qualified bank or financial institution for transfer to the IRS. Along with the payment of its payroll and withholding tax obligations, the employer is required to file an Employer’s Quarterly Federal Tax Return, commonly referred to as a “941 Return,” and an Employer’s Annual Federal Unemployment (FUTA) Tax Return, commonly referred to as a “940 Return.” The same payroll and withholding tax and return filing requirements apply to all active employers, whether operating as a corporation, limited liability company, partnership or sole proprietorship.
Failure To Withhold And Pay Employment Taxes
The IRS considers the failure to properly withhold and pay withholding and payroll taxes a serious violation of the Internal Revenue Code. If a business fails to timely pay its withholding and payroll tax obligation, the IRS is authorized to forcibly collect the tax due, plus substantial penalties and accrued interest. The IRS employs Revenue Officers who specialize in the collection of these liabilities. These Revenue Officers aggressively pursue collection of unpaid payroll taxes from the business, and often from the company’s officers, directors, owners and other responsible individuals.
On the business level, if the Revenue Officer is unable to collect the delinquent payroll tax, the Revenue Officer will often seek to close the business and liquidate its assets. In certain cases, the IRS will criminally prosecute responsible individuals who willfully fail to file payroll tax returns or pay the payroll tax liabilities of an employer.
We Will Be Your Strong Advocates
Daniel Rosefelt & Associates, LLC, Attorney & CPA will work tirelessly to keep your business operating and to solve your payroll tax liability. We will help you understand your payroll tax obligations, help you solve your existing problem, and help you meet your future payroll tax reporting and payment requirements.
Get Legal Help From Experienced Tax Professionals
For help solving your IRS payroll tax issues, contact Daniel Rosefelt & Associates, LLC, Attorney & CPA by calling 301.656.4424. We serve clients throughout the U.S. from our offices in Bethesda, Maryland.