Tampa Tax Attorneys Assisting With Trust Fund Recovery Penalties In Sarasota, St. Petersburg, Clearwater and All of Florida
When business owners face financial trouble, they sometimes fail to pay withholding taxes, typically because they simply do not have the funds available to pay the government what is due.
In order to encourage prompt payment of withheld income and employment taxes Congress passed a law that provides for the Trust Fund Recovery Penalty, or TFRP. Taxes included in this provision are Social Security taxes, railroad retirement taxes, and collected excise taxes. The IRS refers to these taxes as “trust fund taxes” because the employee’s money is held in trust until a federal tax deposit can be made in that amount. This provision is applicable to businesses that cannot immediately relinquish the unpaid trust fund taxes to the IRS. A business does not need to have ceased operations in order for the TFRP to be assessed.
The IRS has determined that 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 who willfully fails to collect or pay them. A responsible person might be a single person or a group of people who have the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes, including: officers and employees of corporations, members or employees of partnerships, corporate directors or shareholders, members of boards of trustees of non-profit organizations, additional personnel with authority and control over funds to direct their disbursement, or other corporations. The second criteria of willfulness is fulfilled when 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.
The IRS uses specific formulas to assess the penalty against a responsible person. They will send a letter notifying the responsible person that they plan to assess the TFRP against them. Typically that responsible person has 60 days to appeal the IRS’ proposal. If an appeal is not received, the IRS will assess the penalty and send a Notice and Demand for Payment.
Receiving notice of the TFRP and other associated correspondence from the IRS can be extremely daunting and requires a prompt response. If you have received such correspondence, contact the experienced tax attorneys at Yesner and Boss, P.L. for a consultation. Serving Tampa, St. Petersburg, Sarasota, Clearwater, New Tampa, and areas throughout Florida, Yesner and Boss is dedicated to assisting you with any and all tax issues.
