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Can an Offer in Compromise be submitted to remove payroll tax liability?

Yes. Either the company can submit an in-business Offer in Compromise if they remain in business (these are difficult to get accepted) or the individual/s assessed Civil Penalty stemming from the unpaid payroll taxes may submit individual offers.

Can an Offer in Compromise be submitted to remove payroll tax liability?2016-05-13T14:53:07-07:00

A corporation owes payroll tax liability of approximately $100,000 for periods spanning from 2003 through 2010. During discussions with the IRS the Trust Fund portion of the liability was assessed personally under the responsible person’s social security number. When if at all does the 10-year collection period begin?

The IRS 10-year collection statute begins when a liability is assessed. This holds true for the Trust Fund Recover Penalty as well.

A corporation owes payroll tax liability of approximately $100,000 for periods spanning from 2003 through 2010. During discussions with the IRS the Trust Fund portion of the liability was assessed personally under the responsible person’s social security number. When if at all does the 10-year collection period begin?2016-05-13T14:52:26-07:00

Wouldn’t a company’s board of directors be considered liable for unpaid payroll taxes if they were on the board at the time the related tax was due?

A board member would not be liable (considered a “responsible person”) unless the board member directly participated in the decision not to pay the payroll taxes or if the board member knowing that payroll taxes were owed, directed the company to pay other items in lieu of paying the payroll taxes.

Wouldn’t a company’s board of directors be considered liable for unpaid payroll taxes if they were on the board at the time the related tax was due?2017-04-11T22:23:03-07:00

Would a signor on a company’s bank signature card that became a signor after the tax was owed be liable for previously accrued payroll tax (assume payroll taxes were paid current for new payroll starting from the date the signor signed the card to present)?

The new signor would not be responsible in theory; however, in practice if the IRS summons the bank signature card and the new signor’s name exists, he or she may have to show via a 4180 interview that they were not a responsible person. This should be easy to prove but lack of defending oneself [...]

Would a signor on a company’s bank signature card that became a signor after the tax was owed be liable for previously accrued payroll tax (assume payroll taxes were paid current for new payroll starting from the date the signor signed the card to present)?2017-04-11T22:23:03-07:00

If you have a client with outstanding payroll obligations stemming from either their corporation or their sole proprietorship, what is the best way to reduce their tax obligation?

The answer to this question depends on the circumstances. Assuming the business is no longer in operation, you should wait until the Trust Fund Recovery Penalty (“TFRP”) has been assessed to the “Responsible Person/s” in the form of Civil Penalty and negotiate either an installment agreement or Offer in Compromise based not upon what is [...]

If you have a client with outstanding payroll obligations stemming from either their corporation or their sole proprietorship, what is the best way to reduce their tax obligation?2016-05-13T14:51:01-07:00

If my client qualifies for Currently Non Collectable (“CNC”) status, would that keep the trust fund penalty from being assessed (assuming my client is considered a “responsible person”) to my client?

The answer is no. The Trust Fund Recovery Penalty (“TFRP”) will be assessed as a Civil Penalty prior to the IRS commencing any collection activity against the responsible person(s). The Client would request CNC status during the collection process and not before. If your client is determined to qualify, they will be placed into CNC [...]

If my client qualifies for Currently Non Collectable (“CNC”) status, would that keep the trust fund penalty from being assessed (assuming my client is considered a “responsible person”) to my client?2017-04-11T22:23:03-07:00

Does the IRS accept Offers in Compromise (“OIC”) for liability stemming from payroll taxes? Assuming the answer is ‘yes’, do they use the same criteria as is used income tax liability? Also is an OIC stemming from payroll tax as likely to be accepted?

Yes, the IRS accepts Offers in Compromise stemming from payroll tax liability. Yes they use the same criteria assuming the offer is based upon doubt as to collectability. The likelihood of an offer being accepted is not determined by the source of the liability unless issues such as fraud are involved.

Does the IRS accept Offers in Compromise (“OIC”) for liability stemming from payroll taxes? Assuming the answer is ‘yes’, do they use the same criteria as is used income tax liability? Also is an OIC stemming from payroll tax as likely to be accepted?2017-04-11T22:23:03-07:00

Assuming the Trust Fund Recovery Penalty (“TFRP”) has not yet been assessed, are outstanding payroll taxes able to be negotiated as part of an installment agreement?

The answer is yes assuming the business is still in operation. You would negotiate an installment agreement on behalf of the business entity and ask for the individuals to be excluded under IRS IRM “Status 63″. If the business entity is no longer operating your client would be best served waiting for the personal assessments [...]

Assuming the Trust Fund Recovery Penalty (“TFRP”) has not yet been assessed, are outstanding payroll taxes able to be negotiated as part of an installment agreement?2017-04-11T22:23:03-07:00

A client of mine had a person (President) in charge of payroll who did not pay taxes and my client was subsequently charged the trust fund penalty. The employee portions have since been paid and the President has since left the company. Who is responsible?

The company (if it is still operating) is responsible. Beyond that it depends on who was considered a “Responsible Person” via a 4180 interview. If the IRS knew that the president (who since left) made the decision not to pay the tax, he or should would likely be held responsible. In addition, unless they were [...]

A client of mine had a person (President) in charge of payroll who did not pay taxes and my client was subsequently charged the trust fund penalty. The employee portions have since been paid and the President has since left the company. Who is responsible?2017-04-11T22:23:03-07:00

How does the 10 year collection statute work on the trust fund penalty?

The 10-year statute of limitations on collection applies to an individual’s Civil Penalty stemming from the Trust Fund Recovery Penalty (“TFRP”) in the same manner as it does for income taxes. Keep in mind that the IRS can “passively” collect beyond the statute if they filed a perfected tax lien.

How does the 10 year collection statute work on the trust fund penalty?2016-05-13T14:48:50-07:00

Is Status 63 good for all tax issues or just payroll taxes?

Status 63 refers to requesting that the IRS not collect the Trust Fund (Civil Penalty) portion of payroll tax liability from the “Responsible Persons” when they have entered into an installment agreement with the Company. This is applicable for payroll taxes but I would not hesitate to ask for it in other cases (such as [...]

Is Status 63 good for all tax issues or just payroll taxes?2016-05-13T14:48:29-07:00

The Revenue Officer assigned to my client’s case claims he has documentation he will use to assess my client as a “Responsible Person”. I have requested copies of the documentation but thus far he is unwilling or is at least stalling in sending me copies. How can I compel the IRS representative to send this information to me?

Typically the Revenue Officer will make his or her decision based upon information provided at a 4180 interview. Other evidence may include a bank signature card or paychecks with your client’s signature on the signatory line. This could have been provided by your client or another person that worked for the company for which your [...]

The Revenue Officer assigned to my client’s case claims he has documentation he will use to assess my client as a “Responsible Person”. I have requested copies of the documentation but thus far he is unwilling or is at least stalling in sending me copies. How can I compel the IRS representative to send this information to me?2017-04-11T22:23:03-07:00

If Trust Fund Recovery Penalty (“TFRP”) is assessed to a previous president and there is doubt as to whether he was a responsible person and willful; and the Corporation recently filed for bankruptcy, what should be done?

If the TFRP was assessed to the previous president he most likely received correspondence from the IRS requesting a 4180 interview to determine if he was responsible for not paying the payroll taxes and the IRS determined he was responsible. Either the past president ignored or did not receive the notice (we have a current [...]

If Trust Fund Recovery Penalty (“TFRP”) is assessed to a previous president and there is doubt as to whether he was a responsible person and willful; and the Corporation recently filed for bankruptcy, what should be done?2017-04-11T22:23:03-07:00

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