BUSINESS TAX PROBLEMS

The first goal for a business entity that owes taxes is the same as it is with an individual that owes personal taxes: get caught up with the ‘current’ tax deposits, and file any required unfiled returns.

Payroll taxes are generally the biggest problem for businesses that have employees, because the IRS can assess penalties personally against the officers (or other deemed responsible parties) of a business that fails to make sufficient payroll deposits. This is called the Trust Fund Recovery Penalty. Why is it called this? Think of it this way: a business that has employees will take FICA taxes out of employee paychecks (Medicare/Social Security and employee tax withholdings) and hold them ‘in trust’ to be paid to the Federal Government. If the employee portions of those funds aren’t paid to the Federal Government, this money that was held ‘in trust’ can be assessed personally against the responsible party(s) of the business that did not remit those payments. This is an example of ‘piercing the corporate veil’, when a business entity can be disregarded so that penalties can be assessed against an individual or individuals, personally.

An IRS Revenue Officer is assigned to investigate and propose a Trust Fund Recovery Penalty assessment against people within the business that they believe are (a) willful, and (b) responsible parties for making payroll deposits. The good news: we can help you navigate this process and go through the motions, and file and conduct any necessary Appeals to help you.