TaxSOS.com Tax Problems Blog

January 9, 2018

Don’t pay taxes you don’t owe. Does your accountant really know?

Filed under: Trust Fund Recovery Penalty — Tags: , , , — Administrator @ 10:47 am

The Taxpayer Advocate Service has posted case results in which a widow’s social security payments were being levied for employment taxes owed by her deceased husband’s business, which had closed. The business was a Corporation and the deceased husband’s accountant had told the widow to pay the outstanding payroll taxes. She had sold her home and paid as much as she could. She kept paying until she had sold her assets, didn’t have anything else to sell, and no money to pay with. Then the IRS levied her Social Security Payments, causing undue hardship.

The accountant was wrong! The surviving spouse was not a Responsible Person. She was not liable! The levy was released. It is not known whether the Taxpayer Advocate Service, inter-alia, filed claims for refund and sought abatement of the erroneous assessment (which is beyond merely obtaining a stay based on Currently Not Collectible). Such would have been recommended by me.

If you have a tax problem, please call me at 1-866-482-9707. The consultation is free.

September 3, 2017

THE IRS TRUST FUND RECOVERY PENALTY – AN OVERVIEW OF IRS INTERVIEW FORM 4180 AND THE INVESTIGATIVE PROCESS IN DETERMINING YOUR PERSONAL LIABILITY.

Filed under: Trust Fund Recovery Penalty — Administrator @ 2:35 pm

THE IRS TRUST FUND RECOVERY PENALTY – AN OVERVIEW OF IRS INTERVIEW FORM 4180 AND THE INVESTIGATIVE PROCESS IN DETERMINING YOUR PERSONAL LIABILITY.

The following summarizes guidelines which Revenue Officers and Managers are to follow in targeting potentially responsible persons. (The source is the Internal Revenue Manual ). Both Civil and Criminal liability exposure exists. …

THE TRUST FUND RECOVERY PENALTY – AN ALTERNATIVE COLLECTION TOOL:

The Trust Fund Recovery Penalty is based upon IRC section 6672 and serves as an alternative means for the IRS to collect unpaid trust fund taxes when the taxes are not fully collectible from the business that failed to pay the withheld taxes. (IRM 5.7.4.1.1).

The IRS uses form 4180 (a copy is here ) as part of the procedures for investigation, recommendation and approval of the Trust Fund Recovery Penalty against individuals who are potentially responsible for the non-payment of the business trust fund taxes.

IRS INITIAL CONTACT WITH POTENTIALLY RESPONSIBLE PERSONS:

During the initial contact with the taxpayer, the revenue office will attempt to conduct interviews with potentially responsible persons. Read More Here

September 2, 2017

The Trust Fund Recovery Penalty and Non-Owner Employees

Filed under: Trust Fund Recovery Penalty — Administrator @ 12:28 pm

The Trust Fund Recovery Penalty and Non-Owner Employees:

Internal Revenue Manual RM 1.2.14.1.3, Policy Statement 5-14 (Formerly P-5-60), states individuals performing ministerial acts without exercising independent judgment will not be deemed responsible. In general, non-owner employees who act solely under the dominion and control of others, and who are not in a position to make independent decisions on behalf of the business entity, will not be assessed the Trust Fund Recovery Penalty. Non-owner employees are those who do not own any stock, interest, or other entrepreneurial stake in the company that employs them.

Ministerial acts are performed under the supervision of someone else and do not require independent judgment or decision-making ability.

The IRS gives the following Example:

The bookkeeper of a company is not an owner and is not related to an owner. She has check signing authority and pays all of the bills the treasurer gives her. She is not permitted to pay any other bills, and when there are not sufficient funds in the bank account to pay all of the bills, she must ask the treasurer which bills to pay. The bookkeeper is performing a ministerial act and should generally not be held responsible for the Trust Fund Recovery Penalty.

Read more about the Trust Fund Recovery Penalty and the interview form 4180 here

August 18, 2017

Trust Fund Penalty – IRS Investigation and Recommendation

Filed under: Trust Fund Recovery Penalty — Administrator @ 4:47 pm

June 29, 2017 – IRS issued Revised IRM provisions regarding: Trust Fund Compliance – Investigation and Recommendation of the Trust Fund Recovery Penalty (copy here)

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