The primary focus of my firm is tax representation in Parkchester, NY. A third-party could be held liable for paying the payroll tax fund which are tax withholdings held on behalf of the IRS. If the third-party is an individual, the person could be financially impacted. A parent could unknowingly become a third-party for an adult son or daughter in an effort to cover the business’ payroll. If the business owner in this case is short on money and the parent covers that responsibility by depositing the funds to cover payroll, then the IRS would seek the unpaid withholdings from the parent who made deposits for payroll. This would fall under “The Trust Fund Recovery Penalty” (IRC 3505).
Under “The Trust Fund Recovery Penalty” (IRC 3505), the lender who provided funds to the business to cover payroll may be personally liable for the unpaid withholdings of the business at the lessor of the amount owed in unpaid withholdings or 25% of the amount loaned to cover the business’ payroll. Although family could be financially on the hook for additional funds owed to the IRS, a third-party could be anyone who just wanted to help a small business with their payroll.
If you or someone you know have payroll trust fund concerns, please feel free to contact me at (917) 708-1097, or via email at millertax.ea@gmail.com.
Miller Tax & Advisory Services
P.O. Box 967
Parkchester, NY 10462
Ph. (917) 708-1097
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