Employment Tax Issues and Trust Fund Recovery Penalties
Our firm handles trust fund recovery penalty defense. Individuals of an employer who have a fiduciary duty to withhold taxes from an employee’s paycheck to pay the IRS and fail to pay over the taxes to the IRS, can receive a Trust Fund Penalty. This is one of the most severe penalties the IRS can assess against the person responsible for paying the employee’s share of the taxes over to the IRS. Criminal and Civil Penalties can be assessed. The penalty is harsh. The penalty is not to the business, it is to the responsible person in the business. Additionally, the Trust Fund Recovery Penalty stays in the IRS records, even after it has been handled, potentially resulting in a harsher treatment for the employee-taxpayer for unrelated issues. It is a huge black mark on a taxpayer’s account.
The IRS can assess a trust fund recovery penalty against many employees in a company. There is joint and several liability. That means each responsible person owes the entire tax debt. However, the IRS can only collect one time for the employee’s share of the taxes. Make sure you are not the company scapegoat. Each assessed employee requires his or her own attorney due to conflicts of interest. One attorney cannot represent multiple assessed employees, even with a signed conflict of interest form from the taxpayers. Set up a conference immediately with our office is you have a potential trust fund recovery penalty coming your way.