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If you need help with a proposed trust fund penalty assessment, call us today to get the very best of professional tax representation.
As a former IRS Revenue Officer I have worked thousands of trust fund cases, I am a true tax expert.
Appealing the Proposed Assessment Trust Fund Penalty Assessment
Letter 1153 advises the responsible party of his or her appeal rights.
The form that the appeal must take is based on the dollar amount of the proposed assessment.
The Letter 1153 also advises the responsible party that they may contact the IRS Revenue Officer within ten days of the Letter 1153 if:
They don’t agree with the proposed trust fund recovery assessment and have additional information to support their case
If you wish to try to resolve the matter informally:
In order to preserve their appeal rights, the responsible party must mail (or fax, if applicable) a written appeal within 60 days of the mailing or personal delivery of the letter (75 days if the letter is addressed to the responsible party outside of the United States). If the revenue officer does not agree with the information submitted informally, then the revenue officer should advise the taxpayer that they must follow the appeal procedures included in the Letter 1153(DO).
TFRP cases are also eligible for Fast Track Mediation (FTM). This program is designed to expedite case resolution since the entire process normally takes 30-40 days to complete. Additional information can be found in Publication 3605, Fast Track Mediation – A Process for Prompt Resolution of Tax Issues. Publication 3605 should be provided to the taxpayer to explain the FTM process.
The ASED is only extended for cases where the taxpayer files a proper appeal within the allowable time period; FTM has no impact on the ASED or the regular appeals procedures. Advise the taxpayer that even if they choose FTM, they must continue to follow the procedures in Letter 1153(DO) by filing the appropriate request within 60 days of issuance of the Letter 1153(DO) if they wish to have the case considered by the Appeals office in case the FTM is not resolved in their favor.
Both the taxpayer and the revenue officer must agree to mediate. The taxpayer must have completed a Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Tax, and supplied all requested back-up documentation related to the trust fund recovery penalty investigation. To initiate the FTM process, the revenue officer will complete an “Agreement to Mediate” and a ” Summary of Issues” and forward the documents to Appeals within three days of securing the taxpayer’s signature.
If the parties do not reach an agreement, then the case will be forwarded to Appeals through Advisory if the taxpayer followed the instructions in Letter 1153(DO) regarding the formal appeal process. The case will then be assigned to a different Appeals officer. If the taxpayer did not follow the formal appeals process, the case should be forwarded for assessment. The taxpayer may still file a claim for refund after assessment if appropriate payment has been made.
If the revenue officer agrees with the information that was submitted informally or if the parties reach an agreement through the mediation process, then the revenue officer should change the determination by following the procedures in IRM 5.7.6.1.7.
If the revenue officer does not change the determination based on the information submitted informally, he or she should advise the taxpayer to follow the formal protest procedures outlined in Letter 1153(DO) in order to protect their appeal rights.
If the amount of tax liability proposed for the the period is: Dollar Amount Type of Appeal $25,000 or Less Small Case Request More than $25,000 Formal Written Protest
If one tax period is more than $25,000 the taxpayer must submit a formal Written Protest.
IRM 5.7.6.1.4 contains the guidelines on the information that the taxpayer should include in a Small Case Request. IRM 5.7.6.1.5 contains the information that the taxpayer should include in a Formal Written Protest. The responsible party should submit any additional information or documentation that he or she wants the Settlement Officer/Appeals Officer to consider. Note:
Usually appeals of penalty cases involve issues of responsibility and/or willfulness or how the penalty was calculated.
Is the IRS trying to assess the trust fund recovery penalty against you?
It is known as the 6672 Penalty.
Here is what to do to avoid the Trust fund Recovery Penalty:
File a “Formal Written Protest”
The potentially responsible party should submit a Formal Written Protest in duplicate and should include:
The responsible party’s name, address, and Social Security number
A copy of the Letter 1153(DO) or date and number of the letter
A statement that the responsible party wants a conference
The tax periods involved (from Form 2751)
A list of issues the responsible party disagrees with and an explanation of why he or she disagrees
Note:
The following statement must be added to declare that the information submitted in this item is true: “Under penalties of perjury, I declare that I have examined the facts presented in this statement and any accompanying information, and, to the best of my knowledge and belief, they are true, correct, and complete.”
If applicable, the law or other authority the responsible party is relying on to support his or her arguments along with an explanation of what the law is and how it applies.
Big Tip: Remember, if the trust fund penalty has been assessed, you can always file an 843 claim, pay the $50 dollars and have a hearing. The other option is to file an Offer in Compromise, Doubt as to Collectibility.
Fresh Start Tax is comprised of Former IRS Agents, Managers and Instructors. The staff also includes CPA’s, tax attorneys and former Managers with the Department of Revenue.
Our company are experts in the field of tax and tax resolution.
We are licensed to practice in all 50 States. We are fast, affordable and put a premium on communication with our client. Our firm has the highest rating given out by the Better Business Bureau.
We have a combined 140 years Federal and State experience.
Closing a Business Checklist from IRS and Fresh Start Tax to help the process go smooth
There are typical actions that are taken when closing a business. You must file an annual return for the year you go out of business. If you have employees, you must file the final employment tax returns, in addition to making final federal tax deposits of these taxes. Also attach a statement to your return showing the name of the person keeping the payroll records and the address where those records will be kept.
The annual tax return for a partnership, corporation, S corporation, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business ceases to exist, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1.
You will also need to file returns to report disposing of business property, reporting the exchange of like-kind property, and/or changing the form of your business. If you do not have a pre-printed envelope in which to send your taxes, refer to the Where To File page for a list of addresses. Below is a list of typical actions to take when closing a business, depending on your type of business structure: Checklist to go over during this process
* Make the final federal tax deposits
o Electronic Federal Tax Paying System (EFTPS)
o Form 8109-B
* File final quarterly or annual employment tax form.
o Form 940, Employer’s Annual Federal Unemployment)Tax Return
o Form 941, Employer’s Quarterly Federal Tax Return
o Form 943, Employer’s Annual Tax Return for Agricultural Employees
o Form 943-A, Agricultural Employer’s Record of Federal Tax Liability
* Issue final wage and withholding information to employees
o Form W-2, Wage and Tax Statement
* Report information from W-2s issued.
o Form W-3, Transmittal of Income and Tax Statements
* File final tip income and allocated tips information return.
o Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips
* Report capital gains or losses.
o Form 1040, U.S. Individual Income Tax Return
o Form 1065, U.S. Partnership Return of Income
o Form 1120 (Schedule D), Capital Gains and Losses
* Report partner’s/shareholder’s shares.
o Form 1065 (Schedule K-1), Partner’s Share of Income, Credits, Deductions,
o Form 1120S (Schedule K-1), Shareholder’s Share of Income, Credits, Deductions, etc.
* File final employee pension/benefit plan.
o Form 5500, Annual Return/Report of Employee Benefit Plan
* Issue payment information to sub-contractors.
o Form 1099-MISC, Miscellaneous Income
* Report information from 1099s issued.
o Form 1096, Annual Summary and Transmittal of U.S. Information Returns
* Report corporate dissolution or liquidation.
o Form 966, Corporate Dissolution or Liquidation
* Consider allowing S corporation election to terminate.
o Form 1120S, Instructions
* Report business asset sales.
o Form 8594, Asset Acquisition Statement
* Report the sale or exchange of property used in your trade or business.
o Form 4797, Sales of Business Property
Should you owe any Federal Payroll taxes, 941’s, remember the IRS has the ability to personally go after the money. This means IRS garnishments and federal tax levies. This process is called the trust fund recovery penalty. Should you have this situation you should immediately contact the tax professionals at Fresh Start Tax today. 1-866-700-1040 We can save you plenty. We are THE PRO’s.
Trust Fund Recovery Penalty, Statute of Limitations. Few people know that this statute exists, yet it can save you thousands and thousands of dollars if you have owed back 941 and payroll taxes. Here is the rule regarding payroll tax cases in regards to the trust fund law.
A simple review of your file can be made to see if this relates to you.
The general rule is that an assessment of tax must be made within three years from the date a return is filed, or the due date of the return, whichever is later.
Generally, this means that the tax must be posted within 3 years from the received date of the return.
This simply means that if the IRS does not set up the trust fund recovery penalty within 3 to 4 years, you no longer owe the tax.
How good that is. Because of the current IRS work load, it has been impossible to work all these cases.
This means you will not owe these back taxes or payroll tax liability. Your IRS problem is over.
