IRS payroll taxes have multiple components. The Trust Fund portion is definitely a component to focus on when dealing with back 941 taxes. This is where individuals get dragged into the mix of IRS collection. The government holds real people responsible for business taxes. Business owners, employees, shareholders, officers, bookkeepers and accountants may all be at risk of being held liable for the Trust Fund. Luckily, you can fight it.
If you’ve received IRS Letter 1153 proposing assessment of the Trust Fund, you have the ability to Protest it within 60 days of the date on the letter.
The 2 most common Protests are easy to understand, but often difficult to prove.
Ministerial Acts, TFRP Assessment Appeal
I’m Not an Owner. How Can I Be Responsible?
Although the “I’m not an owner” declaration isn’t a valid reason to protest the Trust Fund assessment on its own, further analysis may lead to a commonly accepted argument.
What people often mean to say is:
• I didn’t have authority to act independently.
• I acted under the direction of another person.
• I simply performed a “ministerial act”.
This position can be argued by anyone, even an officer of the company (although very difficult). For non-owner employees of a company, it can work well with a well thought out Protest.
Of the two determining factors of a Trust Fund assessment, Responsibility and Willfulness, lack of Responsibility is by far the easier to prove. That is, of course, if you aren’t actually Responsible.
Willfulness, on the other hand, is very difficult to disprove once you’ve been determined Responsible, especially for an officer of the company.
Misapplied Tax Payments
I’ve already paid it. All I have left is penalties and interest.
Making payments toward your back tax isn’t as simple as it may sound. And, it may not always do as much good as you believe it will.
There are specific rules governing payments to the IRS when back taxes are owed. To designate a payment to the IRS, first it must be a voluntary payment. Next, you must clearly advise the IRS where to apply it.
If you can prove that you clearly designated a voluntary payment to be applied toward the Trust Fund and the IRS failed to do it, you’ve got a potentially winnable Protest. If you don’t have the proof, it’ll be tough to get the IRS to see it your way.
941 Trust Fund Tax Guidance
If you’ve got questions about a Trust Fund case, we’ve got answers. Contact M&M for a pressure free, commitment free, confidential consultation. In about 10 minutes we’ll let you know if we can help, how we can help and how much it cost.
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