Payroll Taxes - who can be held responsible

Education & Training with Hallmark Accounting & Tax Solutions, LLC

Elizabethtown, KY - One of the most aggressive stances that the IRS takes in collections is in Trust Fund Recovery cases. This is where an employer fails to report and pay the taxes withheld from employees paychecks. One of the 1st things the IRS will determine, is who is responsible for payment of these taxes. Following is a list of who the IRS can hold responsible for payment of those taxes:

  • Sole Proprietors
  • Partners
  • Bookkeepers
  • Lenders/Creditors
  • Accounting Firms
  • Parent Companies
  • Purchasing Companies

Today we will touch on a few of these. As you are aware, Sole Proprietors are responsible for everything that has to do with their business, so obviously, if a Sole Proprietor has employees, they are responsible for making sure that the taxes withheld from the employees checks, along with the companies matching 7.65% FICA taxes are reported and paid to the U.S. Dept. of Treasury on a timely basis. Similarily, Partners in a Partnership are also responsible for making sure that these taxes are paid in properly.

What many may not know, is that a business' bookkeeper can be held personally responsible for paying the trust funds. ESPECIALLY if that bookkeeper has check signing authority. Along with Accounting firms, a bookkeeper should NEVER take check signing authority as it adds an extra layer of liability for that individual in the eyes of the IRS.

In addition, a little known fact is that if someone lends you money to "make your payroll", whether it be a banking institution, a friend, or family member, they can be held responsible if in certian instances as well.

As you can see, trust fund recovery (payroll taxes) can involve more individuals than just the business owner. If you find yourself behind in paying these taxes, contact our firm as we can help you navigate the options avaialable to help you get the situation resolved.


Michelle R Brown, EA

Hallmark Accounting & Tax Solutions, LLC

P.O. Box 209

Rineyville, KY  40162

PH. 270-506-3935 or 270-634-HELP




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Michelle Brown

Enrolled Agent / Tax Resolution Professional
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