If you 0we 941 payroll taxes, you need to know about IRS  trust fund taxes. Former IRS agents, since 1982, affordable.

Employment Taxes and the Trust Fund Recovery Penalty

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.

These 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.

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) or 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 willfulness 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 may 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 TFRP 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 we determine 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.

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

You can avoid the TFRP by making sure that all employment taxes are collected, accounted for, and paid to the IRS when required.

What you need to know

If you owe back 941 tax debt the internal revenue service will make every effort to collect that from the corporate entity while it is still in business or it has the option to go after responsible persons.

It is in your best interest to seek a tax professional to find out that the trust fund penalty is applicable to you.

The Internal Revenue Service does all it can to make sure his many people are as responsible as possible.

Do not be bullied by the Internal Revenue Service.

Just remember, the 941 tax can be a pass-through tax to the individuals. If this is happened to you or may happen to you. Call us today for a free initial tax consultation.

Owe Payroll 941 Tax Debt & Trust Fund Taxes + What You Need to Know KNOW