SMALL BUSINESS TAXES: TRUST FUND RECOVERY PENALTY AND HOW TO AVOID IT

If you own a business and you have employees, then you are no doubt familiar with the requirement to withhold payroll taxes and submit them to the IRS. According to federal tax regulations, employers are required to deposit their employees' payroll tax withholding amounts, as well as their matching deposits, once every three months.

ARE YOU FACING UNPAID TAXES? TAX ATTORNEYS STANDING BY (800)790-8574

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ Rated
Call (800)790-8574

***We have successfully resolved millions in back taxes for our clients.

For bosses who neglect or refuse to comply with this payroll tax requirement, the IRS has instituted a penalty called the Trust Fund Recovery Penalty (TFRP). Trust Fund Recovery Penalty

What is the Trust Fund Recovery Penalty?

The TRFP is designed to hold employers responsible for complying with the IRS payroll tax laws and to prevent them from neglecting their federal tax responsibilities. The penalty name uses the term "trust fund" to apply to the federal payroll tax deposits. These are called trust funds because employers hold these funds in trust after deducting them from workers' wages before actually depositing them with the IRS.

Who is Subject to the TFRP?

According to the IRS TRFP regulations, any "responsible" business person is subject to handle payroll taxes and will receive a penalty if payroll taxes are not deposited in a timely manner. In the tax code, a responsible person is defined as a person who holds a position of responsibility and is aware of the requirement to submit federal employment taxes. Under this definition, any officer of the company who has access to employee data may be considered a "responsible" person.

In a mid-size company, this could include anyone in the payroll department and all of their superiors. In a large corporation, all of the relevant board members could fall under the definition of "responsible" persons, as well as those directly involved in payroll duties. In a sole proprietorship, the business owner and whoever performs the payroll duties would be considered "responsible".

In order for the IRS to impose the TFRP, the "responsible" person must willfully fail to submit federal payroll tax deposits. However, this standard does not require that the taxpayer be malicious in intent to do so. A business owner who is simply indifferent about the law and neglects to deposit the tax can be liable.

Avoiding the TFRP

The best way to avoid the TFRP is to keep the payroll tax deposits separate from the operating funds. Placing them in a separate account immediately after withholding them helps you avoid the temptation of using them for other purposes or illegally paying lower payroll taxes. You should also submit Form 941 every quarter on time, along with the required payroll tax payment, to make sure that the IRS gets them promptly. If you receive an IRS notice of an impending TRFP that you believe is erroneous, file an appeal within 60 days to have your case heard by an arbiter. Whatever you do, do not ignore one of these notices!

The Trust Fund Recovery Penalty may sound intimidating, but it really exists simply to encourage business owners to comply with federal payroll tax laws. As long as you submit your federal payroll taxes each quarter, you'll probably never have to worry about getting hit with the TFRP. If you do have these troubles, you can talk with a qualified tax professional to resolve your payroll tax problems.

So, if you have IRS Problems, Owe Taxes, have Past Due UnFiled Tax Returns and need IRS HELP – Take action today! You should work with a nationwide tax relief firm. Call Advance Tax Relief (800) 790-8574


GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2017 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online. Feel free to also learn about us and contact us via www.advancetaxrelief.com. However, it doesn’t matter where you live, we service taxpayers nationwide. We have settled millions in back tax penalties and interest for our clients nationwide.
Advance Tax Relief is a Professional Tax Relief Organization

OTHER LINKS:
Advance Tax Relief http://www.advancetaxrelief.com/audit-representation.html
Advance On Wordpress: https://advancetaxreliefblog.wordpress.com/
Advance Tax Youtube: https://www.youtube.com/channel/UCBqQtYZOrJDcoQwyiOgEwHw
Advance Tax Relief on Instagram: https://www.instagram.com/advancetaxreliefusa/
Advance Tax Relief LA; https://www.inglewoodtaxlawyers.com

SMALL BUSINESS TAXES: DETAILS THAT CAN RAISE YOUR SMALL BUSINESS AUDIT RISK - TAX RELIEF

You may pride yourself on being able to run a small business that provides quality services and products. For all of your success, however, you may be unaware that your tax returns could prompt the IRS to audit your company. In fact, many small business owners like you want to do everything in their power to avoid being audited.

ARE YOU FACING UNPAID TAXES? TAX ATTORNEYS STANDING BY (800)790-8574

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ Rated
Call (800)790-8574

***We have successfully resolved millions in back taxes for our clients.

You can lower your own risk and continue to enjoy all of the success of running your own business by understanding some of the primary details that the IRS looks for when choosing whom to audit each year.

1) Missing Forms or Unreported Income

When you file taxes for your business, it is crucial that you fill out every required form and claim every applicable dollar if you want to avoid an audit. In many cases, the IRS is just as aware as you are about your income. Failing to file important details like your payroll taxes or your personal earnings puts you and your business in jeopardy of being audited.

Moreover, some small business owners falsely believe that the IRS will not notice if their lifestyles do not match the amount of income they report each year. If you are living lavishly, yet only claim a modest income, the IRS is more likely to audit you.

2) Claiming Personal Expenses as Business Related
The government likewise could audit you if you repeatedly claim personal expenses as belonging to your business. Including hair salon expenses, cell phone bills, and other costs that are normally associated with personal use on your business' returns puts you and your company in a suspicious light.

If these expenses can genuinely be linked back to your company, however, you should save the receipts to bolster your claims. Saving the receipts to prove your expenses can help you avoid being penalized and having to repay that money to the IRS.

3) Claiming a Home Office on Your Return
The IRS definitely allows people who operate their companies out of their homes to claim a home office on their returns. However, the criteria for doing so is notoriously narrow and in fact continue to change each year. With that, claiming a home office on your return could cause this organization to audit you.

If you plan to claim a home office on your tax return, it is highly recommended that you keep solid documentation and that you utilize professional tax services to file your taxes. A professional tax service can help you avoid unwanted attention and possibly an audit of your returns.

4) Repeatedly Claiming Losses
Every small business owner has an off year every once in a while, which is why the IRS lets owners claim losses and recoup some of that money. However, if you repeatedly claim losses year after year, you are going to draw the ire and suspicion of this agency.

In fact, if you claim losses three out of five years, the IRS may look at your small business as a hobby instead of a viable company. If it deems your company to be a hobby, you cannot enjoy any of the other tax perks that go along with running a small business. Rather than put yourself and your company at risk of being audited, you should use caution when claiming losses on your return.

5) Higher than Expected Deductions
Unusually high deductions also are liable to catch the eye of the IRS. If you report donating a lot of money to charity, yet seem to lack that kind of money to use for such a purpose, this agency may audit you to substantiate that report.

While donating to charity is certainly a worthwhile effort when you run your own small business, you should be honest when claiming such a deduction. Deductions remain one of the primary details that the IRS examines when determining whether or not to audit people each year.

6) Underpayments
Perhaps the most common infraction that leads to people being audited involves underpaying what they actually owe to the government. Paying taxes can indeed be a bit of a hardship, especially if your small business had a lackluster year. Even so, it is crucial that you pay exactly what you owe and not a cent under that amount.

If you underpay your taxes, the IRS could audit you to determine if you purposely withheld that money or if you accidentally left it out because of a mistake or oversight. Proving that you accidentally forgot to pay the right amount of taxes can be difficult, leaving you open to the risk of collection and garnishment. Rather than face collection activities, garnishment, or even fraud charges, you should make a concerted effort to pay the correct amount of money each year and avoid underpaying what you rightfully owe.

The IRS audits small business owners just as it audits private citizens. You can avoid such scrutiny by avoiding these common practices that draw the suspicion of this agency.

So, if you have IRS Problems, Owe Taxes, have Past Due UnFiled Tax Returns and need IRS HELP – Take action today! You should work with a nationwide tax relief firm. Call Advance Tax Relief (800) 790-8574


GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2017 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online. Feel free to also learn about us and contact us via www.advancetaxrelief.com. However, it doesn’t matter where you live, we service taxpayers nationwide. We have settled millions in back tax penalties and interest for our clients nationwide.

Advance Tax Relief is a Professional Tax Relief Organization

OTHER LINKS:
Advance Tax Relief http://www.advancetaxrelief.com/audit-representation.html
Advance On Wordpress: https://advancetaxreliefblog.wordpress.com/
Advance Tax Youtube: https://www.youtube.com/channel/UCBqQtYZOrJDcoQwyiOgEwHw
Advance Tax Relief on Instagram: https://www.instagram.com/advancetaxreliefusa/
Advance Tax Relief LA; https://www.inglewoodtaxlawyers.com

SMALL BUSINESS OWNERS: HOW TO STOP AN IRS TRUST FUND PENALTY - TAX RELIEF

Your business owes the IRS employment taxes, and an IRS Revenue Officer has just called you and requested that you come down to his office for a meeting to discuss the debt.

Chances are, the meeting will include the IRS agent requesting to interview you using IRS Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty.

ARE YOU FACING UNPAID TAXES? TAX ATTORNEYS STANDING BY (800)790-8574

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ Rated
Call (800)790-8574

***We have successfully resolved millions in back taxes for our clients.


You do not know it, but the real focus of the meeting is you, not the business.

That’s right, the IRS can collect an unpaid employment tax liability from not just your business, but you, too.

The IRS calls this a trust fund recovery penalty interview, and it is designed to sniff out who in the business made the decisions not to pay employee withholding taxes to the IRS.

A trust fund recovery penalty interview and investigation permits the IRS to collect the unpaid taxes not only from the business, but from the assets of the individuals involved in the finances of the business.  This is because the employment taxes belonged to the employees, and were to be held in trust by the business for payment to the IRS.

The culprits the IRS is looking for include owners, shareholders, officers, and anyone who signed, or could have signed, bank checks and paid creditors (which often includes employees of the business).

You got it – the IRS takes employment taxes debts seriously.

Sometimes innocent people get caught up in the mess. For example, a clerical employee who signs checks as an accounting function but lacks control over company finances could be targeted simply by virtue of having his name on the bank checks.  In other words, the IRS casts a wide net when it comes to sweeping people into their trust fund net.

But it may be possible for you to avoid the whole mess, stop the trust fund investigation, and not have to succumb to an uncomfortable interview with an IRS agent.

Here are four solutions to putting an end to an IRS trust fund recovery penalty investigation and not having to submit to an interview:

Agree to the trust fund recovery penalty and cancel the interview.  The purpose of the IRS investigation is to determine if you (and others) were decision-makers in the business and controlled financial decisions to not pay the IRS. Let’s say we determine that, ultimately, your acts in failing to see to it that the taxes were paid will make you personally liable for the debt.  We would call the IRS agent, notify him that we are in agreement to the trust fund recovery penalty, and request that he send us IRS Form 2751, Proposed Assessment of Trust Fund Recovery Penalty. If we sign the Form 2751, the liability is agreed to, and the IRS Revenue Officer has discretion to end your investigation; no interview, no stress.

Direct debit streamlined in-business installment agreement.  Internal IRS guidelines permit a Revenue Officer to cancel his trust fund investigation if the employment tax liability is under $25,000 and the business can pay it back in 24 months by direct debit out of its bank account.  This is permitted under Internal Revenue Manual 5.14.5.4, which recognizes that smaller employment tax balances that can be quickly paid do not call for the extreme measures of a trust fund recovery penalty investigation. So if your business has a balance of $25,000 and under and can pay what it owes, you and others in the business have a way out of personal liability for the employment taxes.

Uncollectibility.  Even if you are liable for the trust fund recovery penalty, proving to the IRS that you could never pay it is a way to end their investigation.  Specifically, Internal Revenue Manual 5.7.5.1 permits an IRS Revenue Officer to back off a trust fund investigation if there is no present or future collection potential from you personally.  The IRS will require that you complete a financial statement on their Form 433A, and satisfy them that you cannot pay anything now, and that will never change. In practice, though, know IRS Revenue Officers can be tough on the interpreting the vague standard of whether the debt could ever be collected from you, and often assert the trust fund penalty regardless of your future collection potential.

Statute of limitations on assessment of the trust fund recovery penalty.  The good news is that the IRS does not have forever to do its trust fund investigation and interview you. Internal Revenue Code 6501(b)(2) gives the IRS three years to get its job done.  The three years generally begins on April 15 of the year after the employment tax returns were due to be filed. In other words, if you are involved in a business with employment tax liabilities from 2011, and the returns were filed on time, the IRS’s time to complete its trust fund investigation against you would end on April 15, 2015.  If the IRS contacts you after April 15, 2015 to conduct a trust fund interview on 2011 employment taxes, they could be out of time and barred by law from continuing their investigation and not be able to conduct the interview.

Additional defenses to the trust fund recovery penalty can be mounted on the basis of responsibility or willfulness.

To prevail on the responsibility defense, we would need to prove to the IRS that you did not have control over the company’s decision-making process and finances.

The willfulness defense involves a lack of knowledge about what’s happening in the business regarding the payment of the employment taxes.  To win with a lack of willfulness, it is not enough to simply not have known. The standard includes proving you did not know and could not have known employment taxes were not being paid.
The IRS needs to have evidence of both responsibility and willfulness.  In other words, you can be responsible and in control of the finances and still avoid a trust fund liability by using the willfulness defense.

The IRS tends to aggressively pursue collection of employment taxes and investigation of the trust fund recovery penalty.  But there are ways to prevent the individuals that ran the business from enduring a trust fund investigation and stop an IRS interview.  It is enough that the business is suffering under the weight of the tax debt; you could have defenses to avoid suffering financially along with it.

So, if you have IRS Problems, Owe Taxes, have Past Due UnFiled Tax Returns and need IRS HELP – Take action today! You should work with a nationwide tax relief firm. Call Advance Tax Relief (800) 790-8574

GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2017 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online. Feel free to also learn about us and contact us via www.advancetaxrelief.com. However, it doesn’t matter where you live, we service taxpayers nationwide. We have settled millions in back tax penalties and interest for our clients nationwide.

Advance Tax Relief is a Professional Tax Relief Organization

OTHER LINKS:
Advance Tax Relief http://www.advancetaxrelief.com/audit-representation.html
Advance On Wordpress: https://advancetaxreliefblog.wordpress.com/
Advance Tax Youtube: https://www.youtube.com/channel/UCBqQtYZOrJDcoQwyiOgEwHw
Advance Tax Relief on Instagram: https://www.instagram.com/advancetaxreliefusa/
Advance Tax Relief LA; https://www.inglewoodtaxlawyers.com

Your business owes the IRS employment taxes, and an IRS Revenue Officer has just called you and requested that you come down to his office for a meeting to discuss the debt.

Chances are, the meeting will include the IRS agent requesting to interview you using IRS Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty.

ARE YOU FACING UNPAID TAXES? TAX ATTORNEYS STANDING BY (800)790-8574

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ Rated
Call (800)790-8574

***We have successfully resolved millions in back taxes for our clients.

You do not know it, but the real focus of the meeting is you, not the business.

That’s right, the IRS can collect an unpaid employment tax liability from not just your business, but you, too.

The IRS calls this a trust fund recovery penalty interview, and it is designed to sniff out who in the business made the decisions not to pay employee withholding taxes to the IRS.

A trust fund recovery penalty interview and investigation permits the IRS to collect the unpaid taxes not only from the business, but from the assets of the individuals involved in the finances of the business.  This is because the employment taxes belonged to the employees, and were to be held in trust by the business for payment to the IRS.

The culprits the IRS is looking for include owners, shareholders, officers, and anyone who signed, or could have signed, bank checks and paid creditors (which often includes employees of the business).

You got it – the IRS takes employment taxes debts seriously.

Sometimes innocent people get caught up in the mess. For example, a clerical employee who signs checks as an accounting function but lacks control over company finances could be targeted simply by virtue of having his name on the bank checks.  In other words, the IRS casts a wide net when it comes to sweeping people into their trust fund net.

But it may be possible for you to avoid the whole mess, stop the trust fund investigation, and not have to succumb to an uncomfortable interview with an IRS agent.

Here are four solutions to putting an end to an IRS trust fund recovery penalty investigation and not having to submit to an interview:

Agree to the trust fund recovery penalty and cancel the interview.  The purpose of the IRS investigation is to determine if you (and others) were decision-makers in the business and controlled financial decisions to not pay the IRS. Let’s say we determine that, ultimately, your acts in failing to see to it that the taxes were paid will make you personally liable for the debt.  We would call the IRS agent, notify him that we are in agreement to the trust fund recovery penalty, and request that he send us IRS Form 2751, Proposed Assessment of Trust Fund Recovery Penalty. If we sign the Form 2751, the liability is agreed to, and the IRS Revenue Officer has discretion to end your investigation; no interview, no stress.

Direct debit streamlined in-business installment agreement.  Internal IRS guidelines permit a Revenue Officer to cancel his trust fund investigation if the employment tax liability is under $25,000 and the business can pay it back in 24 months by direct debit out of its bank account.  This is permitted under Internal Revenue Manual 5.14.5.4, which recognizes that smaller employment tax balances that can be quickly paid do not call for the extreme measures of a trust fund recovery penalty investigation. So if your business has a balance of $25,000 and under and can pay what it owes, you and others in the business have a way out of personal liability for the employment taxes.

Uncollectibility.  Even if you are liable for the trust fund recovery penalty, proving to the IRS that you could never pay it is a way to end their investigation.  Specifically, Internal Revenue Manual 5.7.5.1 permits an IRS Revenue Officer to back off a trust fund investigation if there is no present or future collection potential from you personally.  The IRS will require that you complete a financial statement on their Form 433A, and satisfy them that you cannot pay anything now, and that will never change. In practice, though, know IRS Revenue Officers can be tough on the interpreting the vague standard of whether the debt could ever be collected from you, and often assert the trust fund penalty regardless of your future collection potential.

Statute of limitations on assessment of the trust fund recovery penalty.  The good news is that the IRS does not have forever to do its trust fund investigation and interview you. Internal Revenue Code 6501(b)(2) gives the IRS three years to get its job done.  The three years generally begins on April 15 of the year after the employment tax returns were due to be filed. In other words, if you are involved in a business with employment tax liabilities from 2011, and the returns were filed on time, the IRS’s time to complete its trust fund investigation against you would end on April 15, 2015.  If the IRS contacts you after April 15, 2015 to conduct a trust fund interview on 2011 employment taxes, they could be out of time and barred by law from continuing their investigation and not be able to conduct the interview.

Additional defenses to the trust fund recovery penalty can be mounted on the basis of responsibility or willfulness.

To prevail on the responsibility defense, we would need to prove to the IRS that you did not have control over the company’s decision-making process and finances.

The willfulness defense involves a lack of knowledge about what’s happening in the business regarding the payment of the employment taxes.  To win with a lack of willfulness, it is not enough to simply not have known. The standard includes proving you did not know and could not have known employment taxes were not being paid.
The IRS needs to have evidence of both responsibility and willfulness.  In other words, you can be responsible and in control of the finances and still avoid a trust fund liability by using the willfulness defense.

The IRS tends to aggressively pursue collection of employment taxes and investigation of the trust fund recovery penalty.  But there are ways to prevent the individuals that ran the business from enduring a trust fund investigation and stop an IRS interview.  It is enough that the business is suffering under the weight of the tax debt; you could have defenses to avoid suffering financially along with it.

So, if you have IRS Problems, Owe Taxes, have Past Due UnFiled Tax Returns and need IRS HELP – Take action today! You should work with a nationwide tax relief firm. Call Advance Tax Relief (800) 790-8574

GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2017 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online. Feel free to also learn about us and contact us via www.advancetaxrelief.com. However, it doesn’t matter where you live, we service taxpayers nationwide. We have settled millions in back tax penalties and interest for our clients nationwide.

Advance Tax Relief is a Professional Tax Relief Organization

OTHER LINKS:
Advance Tax Relief http://www.advancetaxrelief.com/audit-representation.html
Advance On Wordpress: https://advancetaxreliefblog.wordpress.com/
Advance Tax Youtube: https://www.youtube.com/channel/UCBqQtYZOrJDcoQwyiOgEwHw
Advance Tax Relief on Instagram: https://www.instagram.com/advancetaxreliefusa/
Advance Tax Relief LA; https://www.inglewoodtaxlawyers.com