2 Common IRS 941 Trust Fund Tax Appeals

941 Trust Fund TaxIRS 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.

Did I mention that M&M was recognized by the BBB for Ethics in the Marketplace with the 2015 Honorable Mention Torch Award? Yes, we were. Here’s a picture.

Ethical Tax Debt Help

Ethical Tax Resolution Services

Waiting To Fix Your Back Taxes Can Be Very Expensive!

Mark Mitchell, EA Tax Resolution Expert

Mark Mitchell, EA
M&M Financial Consulting, Inc.

You’ve heard the term, “time is money”. This is true in many circumstances and very true when it comes to resolving your IRS tax liability.

We understand that addressing the IRS is never an enjoyable situation. First, you start receiving tons of letters from the IRS that are hard to comprehend, usually threatening to some extent and are always time sensitive. Second, you may be contacted by an IRS Revenue Officer whose only job is to collect tax for the government. Third, you start to receive tons of phone calls and letters from various tax resolution firms wanting you to hire them immediately

Once this process has started it is pretty common and natural to want to ignore or avoid the problem all together. This is the absolute worst thing that you can do. The longer that you wait to address the issue the more it will cost you, not only in penalty and interest, but also in potential business opportunities lost. Here are a few examples:

(Delinquent Tax Problems Only Get Bigger When Ignored)

• The IRS has the ability to levy bank accounts and accounts receivable without a court order. Continue reading

4180 Trust Fund Recover Penalty Investigation

Does your business owe back 941 employment taxes to the IRS? If you do, the IRS will be looking at you personally as a collection source. The Service will look at anyone they believe may be a Responsible Person of the delinquent business. That means they will be conducting an investigation into the business to determine who performs the duties and functions that determine financial policy, authorizes payroll and other payments of bills, authorizes Federal Tax Deposits and other critical decisions for the business.

The IRS will summons bank statements, copies of cancelled checks and bank signature cards from the business’ bank. They may contact other third parties. And a big part of the IRS Trust Fund Recovery Penalty (TFRP) investigation is Form 4180.

Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Taxes Continue reading

M&M Helps Plainfield IL Client Secure PPIA and release A/R levy

Back Tax Debt Help Plainfield, IL

M&M Helps Plainfield, IL Client Resolve IRS Back Taxes

M&M successfully secured a Partial Payment Installment Agreement (PPIA) of $958/month on an $850,000+ IRS employment tax debt on behalf of an Illinois business client. The PPIA includes the LLC and the business owner personally. Since the IRS Collection Statute is 10 years, this PPIA has the potential to save our client more than $740,000.

We were also able to get a lingering A/R levy released after the Installment Agreement was secured. Time and again clients come to us experiencing difficulties with customers that have received a levy notice from the IRS with instructions to pay the Service instead of our client. The instructions included in the levy notice documents aren’t clear to most first time readers. Many of them process the levy notices incorrectly causing financial harm to the business in IRS collections. Some common questions of Accounts Receivable managers of small businesses are:

• Will we get in trouble if I don’t respond correctly?
• Where do we send the funds?
• When do we send the funds?
• What if no funds are due?
• What if we don’t send the funds?
• Does the levy stay in effect until we pay the total amount shown on the notice?
• Do we need to end our business relationship with this company?

Often in these situations we have to work with our client, their A/R and the IRS to appropriately resolve the situation. Typically some education of the levy process is involved. In this case we were able to sort out the issue and negotiate a release of the levy from the IRS. Our client was able to conduct business as usual.

If you have a looming tax debt, call 866-487-5624 to speak with an M&M Tax Expert today. You’ll be glad you did!

Can You Settle Your IRS Payroll Tax Debt?

M&M's Tax Relief and Resolution System

What Is M&M’s Tax Resolution System?

If you’re a business owner with a payroll tax debt, you’re probably wondering whether or not the IRS will accept a settlement. The answer for employment tax debts is often “no”. This may not be the answer you want to hear, but consider the facts when determining if the IRS Offer in Compromise (OIC) is the right resolution for your business employment taxes.

IRS Offer in Compromise Settlement

The IRS doesn’t haggle on back taxes, no handshake deals. To qualify, you must meet strict criteria, correctly complete all required forms/documents, submit all necessary substantiation, meet deadlines, begin to pay on your offered amount immediately and before acceptance and maintain current compliance, among other steps along the way.

In addition, the IRS aggressively collects employment tax, often from more than one source. The federal government has the ability to collect the Trust Fund Recovery Penalty (TFRP) portion of the employment tax liability from the business and all Responsible Individuals of the business at the same time. With that in mind, consider the following.

IRS Ten Year Collection Statute

Continue reading

M&M Financial Helps Southern California Client Secure PPIA with the Potential to Save Over $900,000

San Juan Capo, CA_5.30.2014M&M recently helped a Southern California Construction business resolve a $2,100,000 tax debt by securing a $10,000 per month Partial Payment Installment Agreement (PPIA). The PPIA will provide our client with the opportunity to save more than $900,000. Here’s how it happened.

A PPIA is a formal monthly payment plan that will not full pay the tax liability before the IRS’ time to collect the debt runs out (ten years). It is reviewed every two years by the IRS to see if your financial situation has changed. If it hasn’t, the Agreement will be reinstated for another two years. If your PPIA outlasts the IRS Collection Statute, you will end up paying less than your total back tax liability.

Our new client, a construction company that grew too quickly for its own good, came to us in bad shape. They weren’t eligible to request a resolution to their tax debt from the IRS due to noncompliance. They were continuing to accrue new payroll tax debts. And, they had no idea if and when the IRS was going to drop the collection hammer on their bank accounts and A/R. Continue reading

Tax Debt Help Red Hill, PA 18076

Red Hill, PA_6.10.2014M&M recently helped a business client from Red Hill Pennsylvania secure a Partial Payment Installment Agreement (PPIA) with a monthly payment of $1,000 to pay back a $564,000 payroll tax debt. Given that the IRS has ten years to collect a back tax debt; our client could end up saving approximately $444,000.

Our client accrued the tax liability due to several accounts receivable that did not pay; some of which filed for bankruptcy. Coupled with an overall decrease in business income due to the economic downturn of 2008, he was left with little choice but to accrue several business debts, the biggest being an IRS employment tax debt of more than half a million dollars. Then he made a wise choice and turned to M&M for help.

The M&M Tax Team promptly completed the investigation and Collection Information Statement (IRS form 433-A/433-B) analysis to determine the best outcome for our client. This includes consideration of the total amount of tax owed, assets and equity, ability to pay monthly, Trust Fund total and other factors.

If you’ve already talked with one of M&M’s Tax Advisors, you know that we don’t go into any new client relationship guaranteeing outcomes. No one can predict the IRS’ acceptance of an Offer in Compromise (OIC), a PPIA or even a standard Installment Agreement, especially without first reviewing the case and the taxpayer’s financial information. We begin client relationships only after a thorough interview by one of M&M’s Tax Advisors. If after the interview process we do take on the new client, we’re confident that we’ll be able to secure a sound resolution to the back tax debt, usually a monthly payment plan and request for the Abatement of Penalties. We also advise our clients that if we see the potential to secure a healthier resolution such as an OIC, or in this case a PPIA, we’ll go that route.

In the case of our Red Hill, PA client, we were able to identify the right resolution and go after it. The PPIA not only resolves the IRS tax debt, but provides protection from levies and seizure while in place. If maintained over the remaining IRS collection statute, the PPIA will significantly reduce the amount of tax paid back.

If you need help resolving your business or personal tax debt, call M&M at 866-487-5624 for a free, confidential consultation with one of our Tax Advisors. We’ll outline a strategy to resolve and reduce your tax debt. If we believe we can help, you’ll get a proposal with a flat fee quote and 15 day money back guarantee. From there, it’s up to you to decide whether or not M&M is the right fit for you and your back tax debt.

How to Reduce Your Payroll Tax Deposit Penalties

Meet the M&M Financial Team

Meet the M&M Financial Team

I’ll bet every tax “expert” from every tax resolution company around the country tells you about removing the penalties from your tax debt by submitting a Reasonable Cause Abatement request in writing. They’re right, an Abatement request could reduce your tax debt significantly. M&M works diligently to request the abatement of our client’s penalties. But we aren’t satisfied with just requesting the removal of penalties. At M&M, we look for other ways to reduce our client’s tax debts.

If you’re a business owner that owes payroll taxes, you may be able to reduce the Federal Tax Deposit (FTD) penalty the IRS has charged your business for making your EFTPS deposits late. Under the authority of the Internal Revenue Code, a taxpayer may designate deposits within a 941 reporting quarter to specific deposit dates. By designating your tax deposits correctly, you may significantly reduce the penalty charged to your account by the IRS. Continue reading

IRS Trust Fund Assessment from Payroll Tax Debt

Click to learn more.

Click to learn more.

Recently the IRS went to court with Mary and Ford Johnson to determine whether or not the Trust Fund Recovery Penalty should be assessed to and collected from the Johnson’s. Without going through the whole case, here are the important points that I took away from it.

This case shows us that you don’t have to be a shareholder or officer to be assessed the TFRP from a business payroll tax debt. This is made clear by the assessment to Mr. Johnson. And you don’t have to manage the day to day operations of the business to be assessed the TFRP, as in Mrs. Johnson’s case.

At M&M we help our clients implement a strategy to resolve their tax debts and protect their livelihood from IRS collection actions. No matter what salesmen from other tax resolution firms have told you, the Trust Fund will be assessed to the Responsible Individuals in most business payroll tax cases that aren’t resolved with a lump sum full payment. Despite this fact, we look to help our clients secure a resolution which allows their business to pay its own payroll tax debt. Give us a call to find out how we do it and if our strategy can benefit you and your company.

Here are a few tidbits from the published court case document.

Mr. Johnson started the non-profit Koba Institute and a for profit business, Koba Associates, in the mid 1990’s. Koba Associates accrued a tax liability which eventually caused it to close. The Johnsons then converted Koba Institute into a for profit company owned solely by Mrs. Johnson. She was also President of the corporation.

Mrs. Johnson delegated her authority to Mr. Johnson limiting her involvement in the operation of the company. However, she kept an office at Koba Institute and received an annual salary, company car, company cell phone and the Johnson’s rent was paid by the business. She came to work once per month to approve Mr. Johnson’s business decisions.

Mr. Johnson managed the day to day operations of Koba Institute including hiring and firing, financial decisions, bill payment and so forth. Mrs. Johnson only signed checks that Mr. Johnson authorized. She did not make financial decisions.

In 2004 Mrs. Johnson received an IRS notice informing her that Koba Institute had not paid its payroll taxes for many quarters. She was not aware of the tax debt prior to opening the notice. Mrs. Johnson then took steps to fire the finance director and directed Mr. Johnson to make the employment tax deposits himself. The business paid its current payroll taxes moving forward, but did not pay the back taxes.

The IRS assessed the TFRP to Mr. Johnson and Mrs. Johnson. The Johnsons took the IRS to court and lost. Though her involvement in Koba Institute was minimal, she was found willful and responsible for the accrual of the tax debt and therefore the Trust Fund was assessed against her. Mr. Johnson was also assessed a Trust Fund liability.

Another big lesson here is that you should be in control of your business in order to make fiscally responsible financial decisions. Leaving someone else in charge of making payroll tax deposits for your business can have an extremely harmful impact on your company and you personally. Good business systems are one way to avoid such mistakes, but there also needs to be checks in place. We’ve come across too many business owners that got burned by their most trusted employee, only to be left with a looming business and personal tax debt to pay. Don’t let it happen to you.

If you’ve found yourself in the position of owing a payroll tax debt to the IRS, it’s serious business. Solid representation can be a huge benefit to a busy business owner without the time, knowledge or experience to negotiate with the IRS. Call M&M today at 866-487-5624 to see how we can help you and your business.

Employers and IRC 6672, the Trust Fund Recovery Penalty, a Civil Penalty

Meet the M&M Financial Team

Meet the M&M Financial Team

M&M Financial can help you resolve your Trust Fund assessment. This is one of our specialties. Here’s some information on the Trust Fund and how M&M can benefit you.

The Trust Fund Recovery Penalty (TFRP) is a portion of an employment tax liability that can be assessed to the Responsible Individuals of a business. Click here for further explanation. The IRS uses the TFRP to enhance voluntary compliance and facilitate the collection of back payroll tax. The IRS is able to collect the same tax from the business and the individual at the same time.

How Does the IRS Determine Who Is Responsible?

The IRS uses an investigative process to determine which individuals to target. At M&M we know the questions that the IRS will ask and the documents they require to conduct the investigation. Our client’s are well prepared for it.

The TFRP may be asserted against any Responsible Individual(s) of an employer that has the duty to perform or the power to direct another person to collect, account for and pay the Trust Fund tax to the IRS. According to the Internal Revenue Manual, the following questions are considered when determining the Responsible Individual(s).

Did the individual: Continue reading