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Employment Taxes

Even though you may be perfectly sound in managing your own finances and always pay your own state and federal taxes in full and on time, if you are responsible for an employer’s payroll, you can face an additional tax risk known as the trust-fund recovery penalty.

If the business you own or control, or for whom you work managing payroll, does not pay certain withholding and employment taxes, you could be held individually liable. If you know or fear that your employer isn’t paying payroll taxes and you’re worried that you could be held liable, you need to call the IRS Help Attorneys at The Law Office of Beverly Winstead, LLC now, before the IRS assesses penalties against you.

Trust Funds. You might assume that if your corporate employer fails to pay taxes, only the corporate employer will owe the tax. Unfortunately, that corporate shield does not apply in the case of employment taxes. When an employer withholds income and other payroll taxes from an employee’s paycheck, the Internal Revenue Code considers that the employer holds those funds in trust. Although the employer owns the funds before paying payroll, once payroll is due, the IRS considers the withheld funds to belong to the employee — and the IRS. For a person, like you, who controls those funds to not pay them over to the IRS is, in the IRS’s view, more akin to diversion, nearly theft, than a simple inability to pay taxes.

Individual Liability. That concept of holding funds in trust is what justifies trust-fund recovery penalties equal to the unpaid withholding and employment taxes (not including the employer’s portion of FICA taxes) plus interest. The penalties apply not just to the corporate employer but also to people who willfully fail to withhold, account for, deposit, or pay withholding and employment taxes. Responsible persons can include corporate officers, employees, and agents, such as controllers and payroll managers, who have authority over the funds. Willful means intentionally rather than mistakenly, such as to deliberately choose to pay other business expenses knowing the employment taxes are due.

Contesting the Penalty. In enacting the trust-fund recovery penalty, Congress in Internal Revenue Code Section 6672 ensured that you, as the allegedly responsible person, can contest the penalty. Section 6672 requires the IRS to notify you at least sixty days before assessing the penalty. If you receive an IRS notice that says the IRS believes you are liable for trust-fund recovery penalties, contact the IRS Help Attorneys now at The Law Office of Beverly Winstead, LLC to promptly and convincingly contest the penalty. If sixty days pass without you convincing the IRS that you are not responsible, the IRS may impose levies and liens against you to collect the penalty.

Counsel’s Role. Just because you receive an IRS notice of a trust-fund recovery penalty doesn’t mean you owe the penalty. If you act quickly to hire the IRS Help Attorneys at The Law Office of Beverly Winstead, LLC, they may be able to raise one or more of the following defenses to your notice of assessment:

You are not a responsible person to whom a penalty applies;
You did not know of the withholding or payroll-tax obligation;
You did not control or direct the misapplication of trust funds;
Any failure to pay trust-fund taxes was mistaken, not knowing;
Others are responsible for contributing to the trust-fund recovery;
The IRS failed to give the required notice;
The statute of limitations has run on the penalty;
The employer posted a bond to suspend enforcement.
IRS Help Attorneys founding and managing partner Beverly Winstead and her team have successfully represented prominent employees and individuals whom the IRS alleges are responsible persons within corporations in trust-fund-recovery disputes. Don’t try to handle this on your own. Call The Law Office of Beverly Winstead, LLC now at (301) 306-1234 or contact the firm online.

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