Although the economy has improved, we still receive a steady stream of phone calls from business owners throughout Palm Beach, Broward and Miami-Dade counties needing help resolving payroll tax problems.
When facing a cash flow problem the owners of a business must decide which creditors will be paid and who will be put off until the cash crunch improves. In order for a business to keep operating, an owner will typically pay his suppliers, employees and other creditors before remitting payroll taxes to the IRS.
If the business continues to operate without paying its payroll taxes, the IRS will eventually demand payment in full for the unpaid taxes. However, it’s a rare case when a business is capable of meeting this demand. If continuing the business is still a viable option, the tax professionals at East Coast Tax Consulting Group will intervene on your behalf with the IRS and negotiate a resolution to your payroll tax problem.
Unfortunately, despite the best efforts of management some businesses are unable to overcome their problems and are eventually forced to close. Although an owner of a corporation or member of a limited liability company may be protected from personally paying outstanding business debts if the business fails, an owner of a small or medium sized business will most likely be responsible for paying the trust fund portion of payroll taxes. Trust fund taxes consist of federal income taxes and FICA taxes withheld from an employee’s wages and does not include the employer’s matching share of FICA taxes.
The IRS collects the trust fund taxes from an owner by assessing the trust fund recovery penalty (TFRP). The TFRP is equal to 100% of the unpaid trust fund taxes. Therefore, if the IRS is unable to collect the employer’s share of FICA taxes from the business, it is generally not permitted to collect it from the business owner as a personal debt.
Before the IRS assesses the TFRP against you it must believe you are a “responsible person” and acted willfully in not paying the taxes. Many small business owners will find it difficult to dispute the finding that they are responsible and willful. However, business owners holding a minority interest in a company may not have be in a position to decide which debts the company paid and thus may not be considered a responsible person. Our tax resolution specialists will help you gather the documentation needed to prove you were not a responsible person and argue your case to the IRS.
If there is no doubt you were the individual responsible for paying the payroll taxes and failed to do so, we will help you determine what tax resolution strategy is best for you. Trust fund recovery penalty problems are often solved with an installment agreement or offer in compromise.
If you need help with a payroll tax problem in Boca Raton or elsewhere in Florida, call the CPAs at East Coast Tax Consulting Group today at 866-550-7655 for a free consultation.