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.
