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IRS Trust Fund Tax Expert, Tax Help + Former IRS Agent + What You Need To Know

by | Dec 11, 2018 | Tax Help

Fresh Start Tax

 

 As a former IRS agent I was a teaching instructor. I’m a tax expert for the IRS trust fund taxes, appeals, and settlements.

 

I literally have worked hundreds upon hundreds of IRS trust fund cases. I have been doing this work since 1973 and are familiar with every single angle every single trick every single secret of the IRS trust fund recovery,

 

IRS goes to some length to determine who was responsible for trust fund taxes.

IRS uses a main form called a 4180 set up  fact patterns to find out who is responsible for the trust fund tax. The 4180 can be found on our website on the homepage under forms. This is a critical form that IRS uses to determine the credibility of each person and to ascertain information as to who is responsible for trust fund taxes.

There are many trick questions on the 4180 so I would caution anyone giving those to IRS to be skilled and not only to be truthful but the stay away from the tricky questions.

Besides securing the 4180 which the revenue officer will insist to have a sit down in person interview, IRS will also ask for bank signature cards, copies of resolutions, copies of canceled checks. IRS needs to have proof documents before they can ascertain who is responsible for the trust fund taxes they cannot do it based on the 4180 alone IRS needs proof in case the case goes to Tax Court.

The bottom line for revenue officer seeking who is responsible for trust funds tax is:who has ultimate authority, decision-making, and who had the right to control.

Please  keep in mind the revenue officer will be looking at past tax returns for assets, they will be looking at company checks to determine who is receiving extra income and for possible shifting of income or assets to those who would’ve been held responsible. IRS wants to make sure no cash, no income or no assets were placed beyond their reach during the course of business.

IRS has the right to also set up a nominee or an alter ego to responsible persons beside the trust fund tax.

A seasoned revenue officer is very crafty and within a matter of an hour or so easily make a determination as to who is responsible for the trust fund tax. The trust fund tax will always be passed on to those who ultimately were in control.

IRS has the right to assert the trust fund penalty to sometime parties such as secretaries or other persons in the Corporation who had specific rights and duties who really were not in control. These cases are sad but many instances the court rules anyone who was aware that the taxes were not being paid and had the ability to do something about it can and will be held against that person. On those cases you always appeal to the Appellate Division and fight them because ultimately IRS will have a difficult time sustaining those in case the case goes to Tax Court.

If your case goes to the Appellate Division IRS will use what’s called a hazard of litigation to determine if they want to bring the case forward to Tax Court.

The hazard of litigation  is IRS making a determination on how much they believe they will win the tax court case. Many times if IRS does not feel they have a clear-cut winner they will settle based on the degree of certainty within the fact pattern of the case they have in front of them.

That is the job of the appellate agent to make that determination.

HINT: I have found in my practice it’s best always to go to appeals because the Appellate Division is a lot more generous than at the local office.

The one thing IRS does not want to lose do is lose in Tax Court because it sets a dangerous precedent for cases going forward.

If you’d like to know more call me for a free initial tax consultation and I will walk you through the exact process based on your situation.

We have over 65 years of working directly for the Internal Revenue Service in the local, district, and regional tax offices of the IRS. We are an A+ rated BBB company.

Our office has over 200 years of total IRS work experience and we are true experts and how to settle your federal payroll tax debt with Internal Revenue Service.

Why have Fresh Start Tax contact the IRS:

You never have to talk with the Internal Revenue Service on these tax matters;
Fresh Start Tax knows what the IRS is looking for;
Fresh Start Tax knows the exact packaging required;
Fresh Start Tax knows the next steps the IRS will take;
You know your case will be handled and resolved as fast as possible.

Other Factors To Consider:

IRS has the right to sell your complete inventory at public auction;
IRS can seize all your accounts receivables;
IRS can hold you personally responsible for this tax;
IRS has the right to lock the doors of your business.

Steps to take to work out an affordable payment plan with the Internal Revenue Service:

Immediately stay current on all payroll tax deposits to show the IRS good faith;
Be prepared to give the IRS a current financial statement;
Make sure your personal tax liabilities are filed and paid;
Have all documentation on the financial statement prepared for the IRS.

If you do not pay your Payroll Taxes IRS can collect them from you individually
To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP.( trust fund recovery penalty )

These payroll taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount.

The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business.

The business does not have to have stopped operating in order for the TFRP to be assessed

BE CAREFUL Who can be Responsible for the TFRP

 

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

Willfully fails to collect or pay them.

A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be:

An officer or an employee of a corporation,

A member or employee of a partnership,

A corporate director or shareholder,

A member of a board of trustees of a nonprofit organization,

Another person with authority and control over funds to direct their disbursement,

Another corporation or third-party payer,

Payroll Service Providers (PSP) ore responsible parties within a PSP

Professional Employer Organizations (PEO) or responsible parties within a PEO, or

Responsible parties within the common law employer (client of PSP/PEO).

For wilfulness to exist, 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 (no evil intent or bad motive is required).

Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness. You will be asked to complete an interview in order to determine the full scope of your duties and responsibilities.

Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.

An employee is not a responsible person if the employee’s function was solely to pay the bills as directed by a superior, rather than to determine which creditors would or would not be paid.

Figuring the Trust Fund Amount

The amount of the penalty is equal to the unpaid balance of the trust fund tax. The penalty is computed based on:

The unpaid income taxes withheld, plus

The employee’s portion of the withheld FICA taxes. For collected taxes, the penalty is based on the unpaid amount of collected excise taxes.

Assessing the TFRP. If the IRS determines that you are a responsible person, we will provide you a letter stating that we plan to assess the TFRP against you. You have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal our proposal.

The letter will explain your appeal rights. Refer to Publication 5, Your Appeal Rights and How to Prepare a Protest if You Don’t Agree (PDF), for a clear outline of the appeals process.

If you do not respond to our letter, we will assess the penalty against you and send you a Notice and Demand for Payment.

Once we assert the penalty, the IRS can take collection action against your personal assets. For instance, we can file a federal tax lien or take levy or seizure action.

IRS Trust Fund Tax Expert, Tax Help + Former IRS Agent + What You Need To Know

Owe IRS Trust Fund Payroll Tax, Beware = Trust Fund Tax, 6672 Penalty – Hire a IRS Tax Professional

by | Sep 10, 2009 | Tax Help, Uncategorized

Fresh Start Tax

If you Owe Back Payroll Taxes, IRS is coming after you. Former  IRS Can Help.

 
Any time you owe back trust fund tax is always wise to hire a former IRS agent or someone with extensive tax experience to go ahead and manage the trust fund that with the Internal Revenue Service.
The Internal Revenue Service takes unpaid trust fund taxes a lot more serious the most taxes simply because it is taxes withheld. IRS takes a much closer look on repair cases so beware if you have been pyramiding tax liability.
The reason I am drawing interest to this type of case is because these cases can be used by the criminal division to put you in jail.
Pay your 941 taxes.  If not hire a tax professional to help negotiate these tax matters.
The other reason I am drawing this to your attention is that there is a tendency when your company is failing, to start up a new corporation.  If the IRS gets wind of these companies moving from company to company and building up IRS payroll taxes, expect the IRS to amp up enforcement.
 
The IRS procedures on Unpaid Trust fund Taxes
1. When a taxpayer is identified as a repeater and pyramiding trust fund taxes, the IRS attempts initial contact within 30 days from receipt of the case.
See IRM 5.1.10 General Handbook, Taxpayer Contacts. Normally, the IRS arranges to meet the taxpayer and his/her representative at the place of business.
If such arrangements are not made, the reason why must be documented in the case history. Such a visit will be more productive and provide an opportunity to view and assess the business operation and it’s assets in the event a risk analysis determination needs to be completed.
The field visitation will also facilitate review of any books and payroll records. In the event the RO is not able to meet the TP at the business location on initial contact, IRM 5.1.10.3(1) requires that a field call be made to the business location to view the assets when practical, but prior to closure of the case.
Prepare to conduct a 4180 interview at the time of the initial contact. Consider calculating the potential TFRP based on the current assessment.
Use the ATFR system to make a rough calculation of the penalty and be prepared to discuss the process and the potential amount of the penalty during initial contact. See IRM 5.7.3 (TFRP) for additional information.
Get the taxpayer current with FTD’s from the date of first contact. Document the case history as to what type of depositor the business is (monthly, semi-weekly) and how the deposits are made (FTD coupons, EFTPS, etc.). The Revenue Officer will monitor compliance with FTD’s.
Also, verification that the FTD’s being made are accurate based on the amount of the current payroll will be monitored. See IRM 5.1.10, Taxpayer Contacts for more specific requirements regarding what information must be obtained during initial contact.
Pyramiding must be stopped immediately.
Advise the taxpayer that enforcement action will be taken if acceptable proof of compliance is not provided as required while the delinquent tax problem is being resolved. In the event the taxpayer continues to pyramid, all appropriate remedies will be used to bring the taxpayer into compliance and to immediately stop the pyramiding. If routine case actions have not been an effective way to stop the pyramiding, consider alternative solutions. Consider seizure and sale and/or pursuit of TFRP.
Secure sufficient financial information during the initial contact so that enforcement action can be taken, when appropriate.
If it is determined during contact with the taxpayer that the business is actually “Out of Business” or the business is no longer required to file returns, the RO will immediately complete Form 2363, Masterfile ENTITY Change, or Form 4844, Request for Terminal Action, to close out the filing requirements on IDRS. Continue procedures to pursue the TFRP investigation. See IRM 5.7.4.
Make a determination of the taxpayer’s ability to pay current and delinquent taxes without delay.
Set specific deadlines when requesting information from the taxpayer. The use of Form 9297, Summary of Taxpayer Contact, will be used in face-to-face meetings where deadlines are set. use of the Form 9297 will ensure the taxpayer has a clear understanding of what has been requested and the specific deadline date the information is required to be submitted. The requirement to make FTDs and the date required to provide verification of FTD can also be listed on the Form 9297.
Installment agreements are not appropriate for taxpayers who continue to accrue tax liabilities after contact because they are not in compliance. See lRM 5.14.7 and 5.7.4.8.1, BMF Installment Agreements, for the procedures to follow when considering an installment agreement for BMF taxpayers who begin making FTDs after contact and are no longer considered a repeater.
Oftentimes, cases involving repeater and pyramiding taxpayers will require enforcement action. On initial contact, when a deadline is set for a specific action, the L-1058, Notice of Intent to Levy and Notice of Your Right to a Hearing will be issued with all required enclosures. Receipt of L-1058, during initial contact, may prompt the repeater taxpayer to comply. (See IRM 5.11.1.2.2.2)
If contact is made, explain to the taxpayer the L-1058 is being issued to ensure their compliance with filing and paying requirements and failure to comply will result in enforcement action. The Revenue Officer must provide the taxpayer with their CDP rights and clearly explain the CDP process. The right to submit a Collection Due Process appeal will expire 30 days after issuance of the letter. The taxpayer will still have the opportunity for an “equivalent” hearing (See IRM 5.1.9.3.5) and/or to appeal a specific planned or actual collection action under the Collection Appeals Program (CAP) (See IRM 5.1.9.4).
If attempts to contact the taxpayer are unsuccessful, consider issuing L-1058 and immediate enforcement action as the next course of action.
 
Make a lien determination within required time frames. Defer notice of lien filing only if the taxpayer is actively seeking financing to resolve the liability or if there is doubt about the correctness of the current balance due.
If levy sources are exhausted and the repeater or pyramiding taxpayer has no assets which can be seized to resolve or offset the liability, consider issuing Letter 903 (DO), see IRM 5.7.2 Monthly Filing and Special Deposit Procedures.
These procedures should be used in the most egregious cases of non-compliance and where the collection procedures have already been unproductive.
Issuance of the Letter 903 (DO) will assist in promoting compliance.
Once the Letter 903 (DO) is issued, subsequent delinquencies by the taxpayer will be accelerated to the field for prompt enforcement action.
Inactivity gaps on these cases should be defined as ” more than 30 days” with no contact or case movement toward resolution.
During a taxpayer contact, when the taxpayer asks to be referred to the Taxpayer Advocate Service (TAS) or the taxpayer meets TAS criteria and the taxpayer’s issue cannot be resolved within 24 hours, then prepare and forward Form 911, Application for Taxpayer
This information is directly form the IRM.
The IRM is a true source of the “how to”  for the IRS.  It is their manual on how every case must be worked.