When the Great Recession first reared its ugly head in 2007, the ripple effect was felt worldwide. Small businesses, historically the first to suffer in times of economic uncertainty, began to fold in record numbers. The housing market, always vulnerable to the fickle nature of the US economy, tanked as well. Then the real estate market followed suit. Caught in the crossfire was the construction industry. Though most contractors are accustomed to navigating their businesses through choppy economic waters, the Recession became a lean, desperate time. Big companies simply battened down the hatches and waited out the storm. Small companies, many of whom lacked the cash reserves to survive months without work, folded in droves.
Those that survived have experienced the worst economic downturn since the Great Depression. Canceled projects, slow pay and no pay receivables, material theft, rising gas and material prices all contribute to working for pennies. Many have had to choose which bills to pay each month, juggling shut-off notices and collection letters. Often times the squeaky wheel gets the grease and the payroll taxes are the expense that goes unpaid. But when the IRS or State does catch up to a delinquent taxpayer, they want the back taxes paid immediately and have the powers to make bring an already struggling business to its knees.
Most business owners have every intention of making up a missed payroll tax deposit, usually with the next payroll. Then it happens again. And before they know it, they’ve accrued thousands of dollars in back taxes. At some point, the IRS comes knocking and wants to be paid in full with penalties and interest. If that’s not possible, the Services will often set up an unrealistic monthly payment. But that’s not the end of it.
The IRS views unpaid payroll taxes as theft, and will hold a business owner personally responsible for a large portion of the payroll tax. The Trust Fund Recovery Penalty or “Trust Fund” portion of the business payroll tax may be assessed to the Responsible Individual(s) that operate the business. A Responsible Individual may be a shareholder, officer, check signer, employee, or any individual responsible for paying the payroll tax on behalf of the business. The IRS may attempt to assess the payroll tax liability to the business and the Responsible Individual(s) in an effort to collect the same tax from as many sources as possible.
If your business owes 941/940 payroll tax, consider retaining representation from a licensed and experienced tax resolution professional. At M&M, we have helped hundreds of small businesses secure reasonable monthly IRS and State Installment Agreements, release bank levies, and abate penalties. We recently helped a Maryland plumbing contractor resolve the Trust Fund Recovery Penalty that was assessed to the business’s Responsible Individuals.
M&M’s clients own and operate a plumbing business. Three family members were assessed the Trust Fund portion of the IRS payroll tax liability. Prior to working with M&M, they secured a formal business Installment Agreement on their own, but the IRS also went after them personally. A husband and wife, and their father were each assessed the Trust Fund.
By utilizing the IRS Fresh Start Initiative, M&M was successful in securing two personal, direct debit Installment Agreements. One agreement for the husband and wife, and one agreement for the father. Each agreement prevents the IRS from filing tax liens on the individuals. In the end, everything has worked out well for this small, family owned business and the owner operators. However, it could have worked out much better had they contacted M&M sooner. (To find real examples of M&M’s Maryland client case resolutions, go to http://mmfinancial.org/nationwide/maryland.html.)
At M&M, our goal with every business client that owes 941/940 payroll tax is to link the personal Trust Fund assessment to the business Installment Agreement. Doing so puts a hold on the personal collection, while the business pays its own tax liability through a monthly payment. Although attaining this solution is dependent on many factors, M&M has been very successful in securing it for many of our clients.
M&M Financial specializes in resolving business and personal tax liabilities stemming from delinquent 941/940 payroll tax. We have perfected a unique tax resolution system that allows us to work within the strict guidelines set by the IRS and State taxing authorities, ensuring the best possible results for our clients. Complete our contact form at http://mmfinancial.org/contact.html, or call us at 866-487-5624 to find out how M&M’s Tax Resolution System can help you resolve your Trust Fund Recover Penalty issues.