Trust Fund Recovery Penalty: The Facts
You have heard of the Trust Fund Recovery Penalty. Trust funds that are not settled are evaluated with penalties. How are Trust funds defined? Trust fund is money withheld from an employee’s paycheck. It may be Medicare, FICA, or federal tax that’s held in trust until a federal tax deposit is made.
Any individual, whether an employee, officer, or director of a corporation, who has the power to collect, account for, and pay trust funds is liable for these funds.
Anybody liable for collection and payment of trust funds and knowingly doesn’t do so is assessed with this penalty. An IRS agent might do interviews of those in the company to figure out who is liable. He will be finding out who made crucial decisions, had authority to sign company checks, had the ability to pay the company�s bills, and who did the tax reporting. It might even turn out to be multiple people. The penalty isn’t divided equally; each individual needs to pay the entire sum until the penalty is settled in full.
If you are one of these individuals, you must know your rights. Know if the right amount was assessed. This sum is equal to the unpaid balance of the trust fund tax. You might wish to check into being eligible for an Offer in Compromise or if there is a possibility of reaching an installment agreement with the IRS.
Whatever the case, you need us! Our office can help you walk through the many factors of the Trust Fund Recovery Penalty. We can provide guidance through the appeal process so you can assess all the possibilities.
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