by Fresh Start Tax | Jul 27, 2020 | Tax Help
Yes, you can file an Offer in Compromise on Trust Fund Taxes. I am a Former IRS Agent who processed both Trust Fund Taxes and Offer in Compromises.
If you are filing for an offer in compromise and trust fund taxes IRS will require financial statements on both the corporate officers and the businesses as well.
IRS will explore every option to collect the tax from both the business and the individual as well.
Therefore, the 433 OIC, and a 433B OIC will be necessary and completely documented for the revenue officer to consider.
IRS will be looking at the individuals as well as the business to pay the tax, not just the business.
Both are to be submitted in the same package to the revenue officer for consideration.
The OIC on a running business is different than an Offer in Compromise for trust fund recovery penalty taxes.
There are some differences:
a. In order to submit an OIC for a running business, any liable party must not contest the trust fund assessment, it MUST BE AGREED UPON.
b The business is the taxpayer filing the offer for back payroll taxes; while an individual is the taxpayer that is filing an offer for trust fund recovery penalty,
c. The business is trying to settle all employment taxes, which includes trust fund taxes and employment taxes, 940s and such,
d. An OIC for trust fund recovery penalty is just settling the trust fund recovery penalty.
The revenue officer will run a full compliance check on both the business and the personal taxes on the responsible individuals.
IRS usually is very skeptical of approving trust fund tax offers in compromise while the business is running.
However, it is possible.
The fear that IRS has in working these cases is that the taxpayer Corporation will not remain current and have consistent problems.
The key to get your offer in compromise accepted by the Internal Revenue Service during this trust fund penalty of a going business is to make sure that your current for a period of time to show IRS that you will keep current going forward.
IRS will carefully look at all of the financial statement to make sure they feel confident that you will remain current, the expenses of been modified to make sure the offer in compromise makes sense.They will look closely at receivables, loans, and assets.
Internal Revenue Service will look at the history of the individual, look at the corporate entity and see if it makes sense for the government.
Many companies need a fresh start and these trust fund recovery penalties will bog down the individuals from moving forward.
As a former IRS agent I’ve worked many of these cases and timing and packaging are the keys to get the offers accepted by the IRS but they are very doable.
by Fresh Start Tax | Jul 23, 2020 | Tax Help
If you find yourself in a jam with a IRS Trust Fund Penalty who better to HELP than a former IRS Agent revenue officer who is an expert on Trust Fund Taxes & Defense Help.
As a former IRS agent and teaching instructor I worked, accessed and collected trust fund taxes from officers and employees of corporations that were liable under IRC 6672.
I made the determines who was responsible. I taught this program and the IRS.
The trust fund penalty is an absolute killer.Its like a train coming down the tracks.
It is important you absolutely know how to defend it so you do not become the target of IRS collection enforcement. Learn how to fight and defend.
Do not pay payroll taxes and BOOM.
You are now stuck will a personal tax liability subject to complete IRS enforcement.
What As corporations, companies struggle for funds to keep there businesses afloat, many times they decide that they can’t pay payroll taxes and they use those funds to cover their bills.
As they stop making tax deposits the liabilities it just snowballs.
When this happens, the IRS has the right to assert the trust fund penalty after those responsible.
What is the IRS trust fund penalty?
Basically, if you do not pay your 941 taxes i.e. withholding and Social Security, the federal government has the right to impose those taxes you held in trust against you personally or any responsible persons of your corporate or entity responsible for the tax and thus collect the money from you on an individual basis.
Most trust fund cases involve officers of corporations.
However, a responsible person may be one or more of the following:
A. an officer or employee of a corporation
,
B. a member or employee of a partnership
,
C. a corporate director or shareholder,
D. a related controlling corporation,
E. employee of a sole proprietorship
,
F. limited liability company (LLC) member, manager or employee
,
G. a Payroll Service Provider (PSP)H. a responsible party within a PSP
,
I. a Professional Employer Organization (PEO)
,
J. a responsible party within a PEO,
K. a responsible party within the common law employer (client of PSP/PEO)
L. a lender, a surety, or any other person with sufficient control over funds to direct disbursement of the funds, or
,
M. in some cases, a person assuming control after accrual of the liability.
How does one become responsible for this penalty?
Through being willful according to the IRS definition of willful.
Definition of IRS Willfulness
1. The trust fund recovery penalty is a civil penalty so the degree of willfulness in failing to collect or pay over any tax leading to liability for this penalty is not as great as that necessary for criminal proceedings.
This is a civil proceeding only.
In certain cases where companies have continued patterns they can become criminals investigations.
Willfulness in the context of the TFRP is defined as intentional, deliberate, voluntary, and knowing, as distinguished from accidental. “Willfulness” is the attitude of a responsible person who with free will or choice either intentionally disregards the law or is plainly indifferent to its requirements.
Some factors to consider when determining willfulness are:
a. Whether the responsible person had knowledge of a pattern of non-compliance at the time the delinquencies were accruing,
b. Whether the responsible person had received prior IRS notices indicating that employment tax returns have not been filed, or are inaccurate, or that employment taxes have not been paid,
c. The actions the responsible party has taken to ensure its Federal employment tax obligations have been met after becoming aware of the tax delinquencies.
How does IRS make there decision and who make them???
A Revenue Officer like me back in the day will do that.
If the company does not provide IRS with bank signature cards and corporate resolutions, IRS simply issues at 2039 form SUMMONS for information from the banks or financial institution.
Each trust fund recovery penalty before goes to the system must have sufficient documentation and there’s a checklist that must be attached is the case moves forward.
There is a internal form 4183, that the IRS uses to make sure the revenue officer did their due diligence to support their decision on who are responsible officer was under 6672 of the IRC code.
It is not very difficult to find out who is responsible, like I said before just follow the money and that’s it!
The use of the IRS form 4180 is very critical investigation who determine business financial policy.It is on our company website.
The principal factor that the IRS considers when examining which individuals may or may not be liable for the TFRP is who signs company checks.
As we say in IRS, follow the money and you will find the responsible.
I am former IRS agent instructor & administered hundreds upon hundreds of trust fund recovery penalties and I am an IRS expert trust fund tax situations.
How do you find out if you are responsible for the trust fund penalty
The revenue officer working the case also and you IRS notice 2751 which breaks out the trust fund liability and a forum 1153 with your appellate rights.
It is always best to appeal your tax assessment.
You must take this serious because this becomes an individual assessment and IRS has their full enforcement powers to go ahead and collect these back taxes. This is just like owing individual taxes, bad news.
How to Defend the Trust Fund Penalty
FIND SOMEONE TO BLAME
The use of the IRS form 4180 by the RO is very critical to investigation.
The RO determines many things including the business financial policy. As a Former IRS agent I took massive amounts of these 4180 interviews.
The RO will ask a series of questions on the form that will start to point to the responsible persons. Page 2 is critical.Keep in mind, along with the answers and facts and the documentation is king.
IRS will look closely at those who filed and review tax returns, who signed the checks, sign contracts, who signed for loans, who made day-to-day decisions, who paid the bills, who decides what bills not to pay, and who ran the show.
The RO can contact former employees, bank officers, anybody they can find to interview, the secretary is a great source of information.
The principal factor that the IRS considers when examining which individuals may or may not be liable for the TFRP is, who signs company checks.
Now, may times others have signed checks but IRS is looking for ultimate control.Who had the power, who had control.
As we say in IRS, follow the money and you will find the responsible.
In defending responsible persons, it is critical to demonstrate that a person lacked the financial control exhibited by the foregoing factors through such things as company business records, involving the business, contracts, and affidavits from third parties, and providing statements to the IRS.
What you are proving is that someone was controlling and directing you. You must show you were not the decision maker.
You must build your own case that you were being controlled of directed by others.
Securing affidavits by others is one way to prove this.Proving your case is the only way IRS will remove you from the trust fund liaiblity.
These investigations are conducted by a revenue officer from the IRS’s collection unit.
The revenue officer typically requests bank signature cards, cancelled checks, corporate resolutions and other business records to identify potential responsible persons.
If the company does not provide these documents voluntarily, administrative summons, a former 2039 will be used to demand the records from the business, banks or from third parties.
The RO usually will follow up with a call or simply send out forms to the company indicating who is responsible, the agent will try to set up as many persons and they can and throw an board net around everyone.
The RO can do as they please because they know you have appeals rights.
by Fresh Start Tax | Jul 23, 2020 | Tax Help
The trust fund penalty is an absolute killer. It is important you absolutely know how to defend it so you do not become the target of IRS collection enforcement. Learn how to fight an defend.
This trust fund penalty is a back breaker. Most people do not know it is coming.
Do not pay payroll taxes and BOOM.You are now stuck will a personal tax liability subject to complete IRS enforcement.
As a former IRS agent and teaching instructor I worked, accessed and collected trust fund taxes from officers and employees of corporations that were liable under 6672.
As corporations, companies struggle for funds to keep there businesses afloat, many times they decide that they can’t pay payroll taxes and they use those funds to cover their bills.
As they stop making tax deposits the liabilities it just snowballs.
When this happens, the IRS has the right to assert the trust fund penalty after those responsible.
What is the IRS trust fund penalty?
Basically, if you do not pay your 941 taxes i.e. withholding and Social Security, the federal government has the right to impose those taxes you held in trust against you personally or any responsible persons of your corporate or entity responsible for the tax and thus collect the money from you on an individual basis.
Mtrust fund cases involve officers of corporations.
However, a responsible person may be one or more of the following:
A. an officer or employee of a corporation
,
B. a member or employee of a partnership
,
C. a corporate director or shareholder,
D. a related controlling corporation,
E. employee of a sole proprietorship
,
F. limited liability company (LLC) member, manager or employee
,
G. a Payroll Service Provider (PSP)H. a responsible party within a PSP
,
I. a Professional Employer Organization (PEO)
,
J. a responsible party within a PEO,
K. a responsible party within the common law employer (client of PSP/PEO)
L. a lender, a surety, or any other person with sufficient control over funds to direct disbursement of the funds, or
,
M. in some cases, a person assuming control after accrual of the liability.
How does one become responsible for this penalty? Through being willful.
Definition of Willfulness
1. The trust fund recovery penalty is a civil penalty so the degree of willfulness in failing to collect or pay over any tax leading to liability for this penalty is not as great as that necessary for criminal proceedings.
This is a civil proceeding.
Willfulness in the context of the TFRP is defined as intentional, deliberate, voluntary, and knowing, as distinguished from accidental. “Willfulness” is the attitude of a responsible person who with free will or choice either intentionally disregards the law or is plainly indifferent to its requirements.
Some factors to consider when determining willfulness are:
a. Whether the responsible person had knowledge of a pattern of non-compliance at the time the delinquencies were accruing,
b. Whether the responsible person had received prior IRS notices indicating that employment tax returns have not been filed, or are inaccurate, or that employment taxes have not been paid,
c. The actions the responsible party has taken to ensure its Federal employment tax obligations have been met after becoming aware of the tax delinquencies.
How does IRS make there decision and who make them???
A Revenue Officer like me back in the day will do that.
If the company does not provide IRS with bank signature cards and corporate resolutions, IRS simply issues at 2039 form SUMMONS for information from the banks or financial institution.
Each trust fund recovery penalty before goes to the system must have sufficient documentation and there’s a checklist that must be attached is the case moves forward.
There is a internal form 4183, that the IRS uses to make sure the revenue officer did their due diligence to support their decision on who are responsible officer was under 6672 of the IRC code.
It is not very difficult to find out who is responsible, like I said before just follow the money and that’s it!
The use of the IRS form 4180 is very critical investigation who determine business financial policy.It is on our company website.
The principal factor that the IRS considers when examining which individuals may or may not be liable for the TFRP is who signs company checks.
As we say in IRS, follow the money and you will find the responsible.
I am former IRS agent instructor & administered hundreds upon hundreds of trust fund recovery penalties and I am an IRS expert trust fund tax situations.
How do you find out if you are responsible for the trust fund penalty
The revenue officer working the case also and you IRS notice 2751 which breaks out the trust fund liability and a forum 1153 with your appellate rights.
It is always best to appeal your tax assessment.
You must take this serious because this becomes an individual assessment and IRS has their full enforcement powers to go ahead and collect these back taxes. This is just like owing individual taxes, bad news.
How to Defend the Trust Fund Penalty
FIND SOMEONE TO BLAME
The use of the IRS form 4180 by the RO is very critical to investigation.
The RO determines many things including the business financial policy. As a Former IRS agent I took massive amounts of these 4180 interviews.
The RO will ask a series of questions on the form that will start to point to the responsible persons. Page 2 is critical.Keep in mind, along with the answers and facts and the documentation is king.
IRS will look closely at those who filed and review tax returns, who signed the checks, sign contracts, who signed for loans, who made day-to-day decisions, who paid the bills, who decides what bills not to pay, and who ran the show.
The RO can contact former employees, bank officers, anybody they can find to interview, the secretary is a great source of information.
The principal factor that the IRS considers when examining which individuals may or may not be liable for the TFRP is, who signs company checks.
Now, may times others have signed checks but IRS is looking for ultimate control.Who had the power, who had control.
As we say in IRS, follow the money and you will find the responsible.
In defending responsible persons, it is critical to demonstrate that a person lacked the financial control exhibited by the foregoing factors through such things as company business records, involving the business, contracts, and affidavits from third parties, and providing statements to the IRS.
What you are proving is that someone was controlling and directing you. You must show you were not the decision maker.
You must build your own case that you were being controlled of directed by others.
Securing affidavits by others is one way to prove this.
These investigations are conducted by a revenue officer from the IRS’s collection unit.
The revenue officer typically requests bank signature cards, cancelled checks, corporate resolutions and other business records to identify potential responsible persons.
If the company does not provide these documents voluntarily, administrative summons, a former 2039 will be used to demand the records from the business, banks or from third parties.
The RO usually will follow up with a call or simply send out forms to the company indicating who is responsible, the agent will try to set up as many persons and they can and throw an board net around everyone.
The RO can do as they please because they know you have appeals rights.
If you are hit with this penalty, always appeal.
Always hire a tax professional when dealing with this issue.
by Fresh Start Tax | Jul 23, 2020 | Tax Help
The trust fund penalty is an absolute killer. It is important you absolutely know how to defend it so you do not become the target of IRS collection enforcement.
As a former IRS agent and teaching instructor I worked, accessed and collected trust fund taxes from officers and employees of corporations that were liable 6672.
As corporations, companies struggle for funds to keep there businesses afloat, many times they decide that they can’t pay payroll taxes and they use those funds to cover their bills.
As they stop making tax deposits the liabilities it just snowballs.
When this happens, the IRS has the right to assert the trust fund penalty after those responsible.
What is the trust fund penalty?
Basically, if you do not pay your 941 taxes i.e. withholding and Social Security, the federal government has the right to impose those taxes you held in trust against you personally or any responsible persons of your corporate or entity responsible for the tax and thus collect the money from you on an individual basis.
Most Trust fund cases involve officers of corporations.
However, a responsible person may be one or more of the following:
A. an officer or employee of a corporation
,
B. a member or employee of a partnership
,
C. a corporate director or shareholder,
D. a related controlling corporation,
E. employee of a sole proprietorship
,
F. limited liability company (LLC) member, manager or employee
,
G. a Payroll Service Provider (PSP)H. a responsible party within a PSP
,
I. a Professional Employer Organization (PEO)
,
J. a responsible party within a PEO,
K. a responsible party within the common law employer (client of PSP/PEO)
L. a lender, a surety, or any other person with sufficient control over funds to direct disbursement of the funds, or
,
M. in some cases, a person assuming control after accrual of the liability.
How does one become responsible? Through being willful
Definition of Willfulness
1. The trust fund recovery penalty is a civil penalty so the degree of willfulness in failing to collect or pay over any tax leading to liability for this penalty is not as great as that necessary for criminal proceedings.
This is a civil proceeding.
Willfulness in the context of the TFRP is defined as intentional, deliberate, voluntary, and knowing, as distinguished from accidental. “Willfulness” is the attitude of a responsible person who with free will or choice either intentionally disregards the law or is plainly indifferent to its requirements.
Some factors to consider when determining willfulness are:
a. Whether the responsible person had knowledge of a pattern of non-compliance at the time the delinquencies were accruing,
b. Whether the responsible person had received prior IRS notices indicating that employment tax returns have not been filed, or are inaccurate, or that employment taxes have not been paid,
c. The actions the responsible party has taken to ensure its Federal employment tax obligations have been met after becoming aware of the tax delinquencies.
How does IRS make there decision and who make them???
A Revenue Officer like me back in the day will do that.
If the company does not provide IRS with bank signature cards and corporate resolutions, IRS simply issues at 2039 form SUMMONS for information from the banks or financial institution.
Each trust fund recovery penalty before goes to the system must have sufficient documentation and there’s a checklist that must be attached is the case moves forward.
There is a internal form 4183, that the IRS uses to make sure the revenue officer did their due diligence to support their decision on who are responsible officer was under 6672 of the IRC code.
It is not very difficult to find out who is responsible, like I said before just follow the money and that’s it!
The use of the IRS form 4180 is very critical investigation who determine business financial policy.It is on our company website.
The principal factor that the IRS considers when examining which individuals may or may not be liable for the TFRP is who signs company checks.
As we say in IRS, follow the money and you will find the responsible.
I am former IRS agent instructor & administered hundreds upon hundreds of trust fund recovery penalties and I am an IRS expert trust fund tax situations.
How do you find out if you are responsible for the trust fund penalty
The revenue officer working the case also and you IRS notice 2751 which breaks out the trust fund liability and a forum 1153 with your appellate rights.
It is always best to appeal your tax assessment.
You must take this serious because this becomes an individual assessment and IRS has their full enforcement powers to go ahead and collect these back taxes. This is just like owing individual taxes, bad news.
How to Defend the Trust Fund Penalty
FIND SOMEONE TO BLAME
The use of the IRS form 4180 by the RO is very critical to investigation.
The RO determines many things including the business financial policy. As a Former IRS agent I took massive amounts of these 4180 interviews.
The RO will ask a series of questions on the form that will start to point to the responsible persons. Page 2 is critical.Keep in mind, along with the answers and facts and the documentation is king.
IRS will look closely at those who filed and review tax returns, who signed the checks, sign contracts, who signed for loans, who made day-to-day decisions, who paid the bills, who decides what bills not to pay, and who ran the show.
The RO can contact former employees, bank officers, anybody they can find to interview, the secretary is a great source of information.
The principal factor that the IRS considers when examining which individuals may or may not be liable for the TFRP is, who signs company checks.
Now, may times others have signed checks but IRS is looking for ultimate control.Who had the power, who had control.
As we say in IRS, follow the money and you will find the responsible.
In defending responsible persons, it is critical to demonstrate that a person lacked the financial control exhibited by the foregoing factors through such things as company business records, involving the business, contracts, and affidavits from third parties, and providing statements to the IRS.What you are proving is that someone was controlling and directing you.
You must build your own case that you were being controlled of directed by others.
The Revenue Officer.
The TFRP investigation is conducted by a revenue officer from the IRS’s collection unit. The revenue officer typically requests bank signature cards, cancelled checks, corporate resolutions and other business records to identify potential responsible persons.
If the company does not provide these documents voluntarily, administrative summons, a former 2039 will be used to demand the records from the business, banks or from third parties.
The RO usually will follow up with a call or simply send out forms to the company indicating who is responsible, the agent will try to set up as many persons and they can and throw an board net around everyone. The RO can do as they please because they know you have appeals rights.
Some RO’s are gracious and others not so much.
by Fresh Start Tax | Jul 22, 2020 | Tax Help
As a former IRS agent the number one question I am asked is, “why does IRS audit a tax return.” Its Your DIF Score. Understand the process, stop getting audited by the IRS .
While there are variety of reasons the IRS audit tax returns, the chief reason is because of the DIF score. That stands for, Discriminate Index Function.
Every return filed goes through an numerical DIF audit and every return is rated,ranked, and scored by the IRS.
Understanding why you get audited can help stop IRS Tax Audits
The DIF process is responsible for more IRS tax audits than any other of the IRS processes.
Each year more filters are added and it process becomes more deadly and brings a greater ROI, rate on investment.
So what is the” DIF ? ”, Discriminate Index Function, Knowing this will help IRS Audits
It is a mathematical technique used to classify income and expenses on tax returns as to successful IRS tax audit potential.
Under this concept, formulas are developed based on available data and are programmed into the computer to classify returns by assigning weights to certain basic return characteristics.
These weights are added together to obtain a composite score for each return processed. This score is used to rank the returns in numerical sequence (highest to lowest).
The higher the score, the higher the probability of significant tax change.
The highest scored returns are made available to IRS audit agent and eyeballed so see what tax returns have the greatest audit potential and bring to the field.
IRS has mandates on how many tax returns they audit based on examinations guidelines from the National office and expected revenue, so it only make sense the IRS plans to attack the low-hanging fruit.
What IRS says about the DIF Score , Its a computer scoring IRS audit.
Some returns are selected for examination on the basis of computer scoring. Computer programs give each return numeric “scores”.
The Discriminant Function System (DIF) score rates the potential for change, based on past IRS experience with similar returns.
The Unreported Income DIF (UIDIF) score rates the return for the potential of unreported income.
IRS personnel screen the highest-scoring returns, selecting some for audit and identifying the items on these returns that are most likely to need review.
Info on the DIF Score.
The program takes into consideration your:
1.income,
2.the size of your family,
3.where you live, zip code,
4.how your money is earned,
5. expenses taken,
6. tax credit,
7, business income compered to business losses,
8.and key line items on your tax return.
There are about 22 filters IRS uses.
IRS has an algorithm it runs all returns through to see if a tax return has audit potential.
Your DIF score is far from the norm and you win the nasty gram from the IRS.
If you know that your return has what we refer to as “red flags,” you need to be extraordinarily careful to keep accurate records and receipts.
Another interest of note, just because your tax return has a high DIF score does not necessarily mean that your tax return will be audited.
A human auditor will look at the return to confirm that this tax return has audit the potential.
BIG TIME KEY TAX TIP To STOP The IRS Audit
If you’re submitting a tax return that you believe has red flags, attach the documentation to the return so when the auditor is looking at the return to score, the information is attached to shield off the audit.
Example:
A great example of this is if you tithe to a church and that tithe is well above the norm, actually enclose the statement and the check so when the auditor is looking at the tax return they can stop the tax audit.
