IRS Trust Fund Penalty – IRS has the option NOT to ASSESS – Do not be bullied by the IRS, fight back by using the IRS IRM.
Most of the time a Revenue Officer will try to bully taxpayers and their representatives around by telling them they are going to set up the trust fund recovery penalty on a corporation in business and making there payment via a installment agreements.
The truth of the matter is, most of the Revenue Officers are not telling you the whole truth. There is a tax provision that the IRS can recommend. The service can recommend the non-assertion of the trust fund recovery penalty. You will never hear this from the local IRS. The local IRS only acts in there best interest.
Under IRS IRM 5.14.7:
http://www.irs.gov/irm/part5/irm_05-014-007.html
“In general, do not request assessment of Trust Fund Recovery Penalties if business taxpayers meet the terms of installment agreements.
If you are currently working with the IRS insist on the aforementioned manual section.
However, the trust fund recovery penalty must be considered on the potentially responsible persons of the business entity based on the following procedures.
1. If the agreement will not fully pay all balances due at least a year before the earliest Assessment Statute Expiration Date (ASED).
If this is the case the IRS Revenue Office will have to;
1. Assemble all documentation for completion of the penalty to the point of proposing assessment;
2. Complete interviews for all potentially responsible persons, and any other interviews necessary to determine responsibility and willfulness;
3. Secure 433A (Collection Information Statement) from all potentially responsible persons. Conduct financial analysis to determine whether the penalty, if assessed would be collectible;
4.Request signature of Form 2750, “Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty” from all potentially responsible officers. See IRM 5.14.7.4.1(1) through (4); and
5. If a potentially responsible officer refuses to extend the ASED, and the trust fund recovery penalty is determined collectible, complete and recommend assessment of the TFRP for that responsible person.
6. If potentially responsible persons have the ability to pay from current assets or income, request payments be made to reduce the trust fund portion of the liability. If they have the ability to make a significant payment or payments on the trust fund portion of liabilities, but do not make such payments (or do not make plans for payment from personal assets), consider recommending assessment of the TFRPs. If TFRPs are assessed on these cases, lien determinations should be made and, if appropriate, liens should be filed, and in most cases no other collection action should be taken during installment agreements.
However, if after assessing the TFRP the responsible person still does not make plans for payment from personal assets, other collection action may be taken. Before taking collection action against the responsible person, document the ICS history on why the action is being taken (since the corporate or LLC entity is in an IA) and group manager concurrence must be secured before such action commences.
Exception to the rule;
If taxpayers are currently “repeaters” , the trust fund recovery penalty normally will be assessed. (See IRM 5.14.7.2(1)(c).)
If you are currently working with the IRS insist on the aforementioned manual section.
