Health & Fitness
Payroll Tax Debt in Greenwich, CT: What Happens When the Business Can’t Pay the IRS the Payroll Taxes - Part II.
In this segment of the 3 part series on Payroll Tax Issues with the IRS, we review the individual assessment by the IRS for the Trust Fund Recovery Penalty.
We represent taxpayers involved bankruptcy & financial restructuring and civil and criminal taxpayer representation. In Part I of this series we reviewed the basics of the payroll tax assessment process. We represent many business owners in Greenwich, Connecticut and elsewhere dealing with outstanding payroll tax liabilities. This next installment will review the issues surrounding the individuals deemed responsible for the unpaid payroll taxes by the employer.
As we discussed briefly in Part I of this series, the IRS will issue a letter to each individual (Letter 1153) stating that it believes the individual is responsible for the unpaid payroll taxes and giving the individual 60 days to file his or her protest.
The IRS will also send along Form 2751, which is a waiver the taxpayer can sign if they agree to be held responsible.
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We never (almost never) have taxpayers sign form 2751. Even if the taxpayer agrees that he or she are responsible, by signing the form it accelerates the assessment and his or her movement into the Collection Division inventory. If the taxpayer is responsible we prefer to use the 60 days to prepare for how we plan to handle IRS Collection: Uncollectable, Installment Agreement, Offer-in-Compromise.
The IRS will seek to collect as much as it can from the business and from each responsible party, as each party is legally jointly-and-severally liable for the entire amount. Though it cannot collect more than it is owed, it will collect from whomever it can, without regard to fairness. If one individual ends up paying more than his or her fair share they can feel free to sue the other responsible people in federal court. The IRS does not need to be involved.
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For example: If the IRS is owed $100,000 of unpaid payroll taxes by a business, and $65,000 of that is considered to be “Trust Funds” withheld from employees, and the IRS collects the entire $65,000 from one of the three owners, the business would now owe just the balance ($100,000 - $65,000 = $35,000) and the owner that paid could sue the other two owners for contribution.
In Part 3 of this series I will discuss IRC § 7202 and when payroll tax cases can and do go criminal.
If you have any questions about Payroll Tax Issues or criminal tax issues in Greenwich, Connecticut or elsewhere please feel free to contact me at (203) 285-8545 or by email at egreen@gs-lawfirm.com.
243 Tresser Boulevard, 17th Floor
Stamford, CT 06901
Ph. (203) 285-8545 x 102
Fax (203) 286-1311
