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Plano TX - Payroll Tax Debt and Fighting the TFRP Assessment

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Education & Training with Bob Jablonsky & Associates

In previous posts, we’ve covered the complexity and catastrophic harm that can be caused when a business incurs Payroll Tax Debt. In addition to putting the business at risk, the IRS can assess personal liability to Responsible Persons of the business for the trust or fiduciary portion of the payroll taxes. This is known as the Trust Fund Recovery Penalty or the TFRP.

 

An individual can be held responsible for the TFRP when they are considered responsible for withholding, accounting for, depositing or paying payroll taxes and they are deemed to have willfully failed to do so. Some business owners and/or employees believe that that only an owner is held responsible for the TFRP. That is not the case. Substance is the driver and not title. This means your key to not being held responsible for the TFRP is that the individual was either not responsible for withholding, accounting for, or depositing the payroll taxes and/or did not willingly do so.

 

Below are some of the areas I review and actions I take to address a TFRP Assessment:

  • Has the 4180 interview of my client already occurred?
    • If not, I rarely permit my client to complete the interview. I complete it on their behalf. The goal is to answer the questions truthfully but not to provide any information not required.
    • If the interview has occurred, I want to obtain copies of the interview forms for my client and for all others interviewed. Is anything said that clears my client or that the IRS is interpreting in an incorrect manner?
  • Was my client a check signer? Obtain copies of cancelled check. Did someone else sign the checks? Was my client a signer on the bank accounts?
  • Who makes decisions on what bills are and are not paid?
  • If I believe my client may not be responsible, I interview former employees, and if the former employees validate that my client was not responsible, I get affidavits from them.

After reviewing all of the evidence, my goal is to build a story that supports that my client is not responsible. If it turns out that they do fit the definition of a responsible person, our goal shifts to finding the best solution for them and minimizing their exposure. We’ll cover some of those options in coming articles.  Stay Tuned!

 

Do You Need Help?

If you need help with IRS Payroll Debt or other IRS Collection issue, I’d be happy to talk with you. Please give me a call at (972) 821-1991 or email me at bob@jablonskyandassociates.

 

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