Services: Trust Fund Recovery Penalty: Individuals
A Serious Penalty Affecting Individuals and Businesses
In determining whether to assert the Trust Fund Recovery Penalty against an individual for unpaid corporate taxes under Form 941, the IRS looks at various factors. These factors include but are not limited to check signing authority, the position held within the company, the percentage of ownership, the amount of control one can exercise over decision-making authority, who signed the tax returns, and who hired and fired employees.
These factors help determine whether the Trust Fund Recovery Penalty should be asserted against the persons involved in the operation of the corporation responsible for unpaid tax under Form 941. By asserting the Trust Fund Recovery Penalty against individuals, the IRS expands its collection potential from the business itself to additional taxpayers.
The Trust Fund Recovery Penalty consists of all of the income tax that was withheld from employees' wages under Form 941 plus the employees' share of FICA and Medicare, less certain credits. The Trust Fund portion of the Form 941 liability is typically around 70 percent of the total due, exclusive of penalties and interest.
In its investigation of whether to assert the Trust Fund Recovery Penalty against individuals involved in a corporation that owes unpaid tax under Form 941, the IRS typically completes a Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Taxes. This completion of Form 4180 is done by an IRS revenue officer in an interview with the taxpayer.
When the IRS proposes to assert the Trust Fund Recovery Penalty against an individual, it issues a Form 2751, Proposed Assessment of Trust Fund Recovery Penalty. An individual has sixty (60) days from the issuance of the Form 2751 to protest the proposed liability.
If you have recently received Form 2751 and wish to resolve your IRS problems, please call us. Patrick T. Sheehan & Associates, Attorneys at Law, P.C. is well suited to help you find relief from Trust Fund Recovery Penalties and solve your IRS problems. If you are interested in resolving your IRS problems now and avoiding future tax problems, please call us. Or, learn more about Trust Fund Recovery Penalty - Businesses.
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