Source: https://www.federaltaxprofessionals.com/payrolltaxproblems-php/
Timestamp: 2019-04-21 20:10:25+00:00

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IRS tax relief is just around the corner. At Federal Tax Professionals, we have specialized in payroll tax problems, 941s and 940s for many years. When helping a taxpayer with a payroll tax issue, one of the first courses of action that we take is bringing the taxpayer into compliance by directing him or her to hire a payroll service, such as ADP. The reason we do this is to prove to the IRS that the taxpayer is showing good faith. If the taxpayers are already compliant or their companies are closed, and they simply have payroll tax problems, they become collection actions from the IRS. In most cases, a payment plan that is suitable for tax relief is implemented by Federal Tax Professionals, based upon our keen ability to understand the right IRS tax code.
We cautiously advise that taxpayers should never deal with the IRS on their own concerning a payroll tax problem. The reason behind this is the IRS has to conduct a trust fund recovery interview with the taxpayer. They ask very complicated questions to access liability to as many people as possible within the company. Answering these questions requires a great deal of skill and knowledge of the IRS laws.
Federal Tax Professionals has been successful in stopping the IRS from closing any of the companies that we represent. This is imperative to know because in most payroll tax problems, the agent who is assigned to the case will immediately start seizing assets of the company. These assets include, but are not limited to accounts receivables, credit card merchant accounts, bank accounts, equipment, fixtures and furniture. This usually means the company has to close its doors. If there is still an outstanding balance on the payroll taxes, the IRS begins collections on responsible individuals. In other words, the IRS will begin actions, such as wage garnishments, bank levies and the seizure of cars and properties.
Many taxpayers don’t believe that the IRS would take such drastic measures. But with our inside knowledge of the IRS, Federal Tax Professionals has seen many agents who have been overly zealous and even ruthless in their methods of collections for payroll tax problems. The reason some of the IRS agents are like this is because they feel that the taxpayer has stolen money from the government and its employees. At Federal Tax Professionals, we vigorously defend our clients from the IRS’s aggressive collection actions.
Call today to successfully resolve your payroll issues, 940s and 941s.
Joseph C****** (aka,Taxpayer) hereby protests the proposed assessment of the Trust Fund Recovery Penalty as set forth below. This protest is filed with respect to the 60 Day Letter (Letter 1153) dated April 17, 2010, and the accompanying explanations. Taxpayer reserves the right to file one or more supplements to this protest.
Taxpayer is a calendar year-end taxpayer. Taxpayer filed his federal income tax return on Form 1040.
3. Taxable years at issue: T**, Inc. Forms 941 for periods ending September 30, 2008, March 31, 2009 and June 30, 2009.
4. Request for conference: Taxpayer requests a telephonic conference with the Internal Revenue Office of Appeals with respect to the findings of the examining Revenue Agent.
communications: In accordance with section 1001(a) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, Taxpayer requests to be present at all communications between the Internal Revenue Service Examination Division and the Appeals Division with respect to this matter. Taxpayer requests advance notice of such communications so that Taxpayer can arrange to be present. In addition, Taxpayer requests to be present at all communications between Chief Counsel Representatives, and the Appeals Division with respect to this matter. Taxpayer requests advance notice of such communications so that Taxpayer can arrange to be present. Taxpayer further requests copies of all written communications and summaries of any oral communications between the Internal Revenue Service Examination Division and the Appeals Division with respect to this matter. Finally, Taxpayer requests copies of all communications, whether written or written summaries of oral communications, between the Examination Division and any third party that occurred during the course of the examination of Taxpayer.
Joseph C****** should be given the opportunity to present information that will show that he should not be assessed the Trust Fund Recovery Penalty for the unpaid employment taxes from T**, Inc.
Is Joseph C****** responsible for the Trust Fund Recovery Penalty for unpaid employment taxes from T**, Inc.?
The Broomall, ** office is the mailing address for T**, Inc. and is considered the company’s headquarters.
Thomas R****** and Barbara F****** work in the Broomall, ** office and that Joseph C****** works in the Cedar Knolls, ** office.
While Joseph C****** would easily commute to the Cedar Knolls, ** office, he would not go to the Broomall, ** office because it would take about 2 hours of driving time to get there from his residence.
All of T** Inc.’s administrative functions, including payroll, banking and paying of creditor’s invoices, are handled out of the Broomall office. Joseph C****** was not made aware that other creditors were being paid ahead of the IRS in regards to the payroll taxes.
Joseph C****** is responsible for generating sales for T**, Inc., and does not have authority over any administrative business, including but not limited to payroll, human resources, and banking functions. In addition to not working in the Cedar Knolls, ** office, Mr. C****** did not receive nor review any company financial and/or payroll reports. Mr. C****** does not have check writing authority and consequently has not signed any checks for T**, Inc. In addition, Mr. C****** did not sign any Forms 941.
Joseph C****** does not have sole authority to determine T**, Inc.’s financial policy. There is no evidence presented that would indicate that the three shareholders met during the periods at hand to discuss and determine T** Inc.’s financial policy regarding the payment of payroll and payroll taxes.
Mr. C****** does not have the authority to pay bills from creditors or others, That responsibility is the authority of those working in the Broomall, ** office.
Mr. C****** does not have the authority to guarantee or co-sign loans, That responsibility is the authority of those working in the Broomall, ** office.
Mr. C****** does not have the authority to hire/fire employees, That responsibility is the authority of those working in the Broomall, ** office.
6671(a) Penalty Assessed as Tax. – The penalties and liabilities provided by this subchapter shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as taxes, except as otherwise provided, any reference in this title to “tax” imposed by this title shall be deemed also to refer to the penalties and liabilities provided by this subchapter.
6671(b) Person Defined. – The term “person”, as used in this subchapter, includes an officer or employee of a corporation, or a member or employee of a partnership who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.
IRC § 6672(a) General Rule.— Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts i-n any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over. No penalty shall be imposed under section 6653 or part II of subchapter A of chapter 68 for any offense to which this section is applicable.
The penalty equal to 100 percent of amounts withheld from the compensation of an employee is imposed if the withheld amounts are not remitted to the United States. Code Sec. 6672 . It is only these amounts of tax withheld from the employee to which the penalty may apply; the penalty does not apply to the employer’s share of the FICA tax, and the penalty does not apply to the FUTA tax or other amounts of tax due from the employer. Slodov v. United States, SCt, 78-1 ustc ¶9447, 436 US 238.
In Wilma Shore v. Brown, Plaintiff v. Kevin M. Brown, Acting Commissioner of Internal Revenue Service of United States of America, and Does 1 through 10 inclusive, Defendant. United States of America, Counterclaimant v. Wilma Shore v. Brown, Counterclaim Defendant, and Gregory Shore and Brenda O. Reynolds, Additional Counter claim Defendants., U.S. District Court, E.D. California, 2009-2 U.S.T.C. ¶50,68, the court stated that “The Ninth Circuit has consistently identified persons who have “the final word as to what bills should or should not be paid, and when” as “responsible” persons under §6672 . Purcell v. United States [93-2 ustc ¶50,460], 1 F.3d 932, 936 (9th Cir. 1993). A person has the final word if that person had “the authority required to exercise significant control over the corporation’s financial affairs, regardless of whether he exercised such control in fact.” Purcell [ 93-2 ustc ¶50,460], 1 F.3d at 937. In other words, responsibility is a matter of status, duty, and authority, not knowledge. Davis, 961 F.2d at 873 (upholding the trial court’s finding of “responsible person” based on the plaintiff’s position as the president, member of the board, and major shareholder, even though the plaintiff had no knowledge of the tax default). “Authority turns on the scope and nature of an individual’s power to determine how the corporation conducts its financial affairs; the duty to ensure that withheld employment taxes are paid over flows from the authority that enables one to do so.” Purcell [ 93-2 ustc §50,460], 1 F.3d at 936.
The failure to collect or account for and pay over trust fund taxes must be willful, 1 Courts look to the actions undertaken to determine whether the failure to collect and pay over is willful.
Paying creditors instead of paying over withholding taxes with the knowledge that the taxes are due constitutes willfulness as a matter of law. Carlson v. United States, S.D. Iowa, 2003-1 ustc §50,265. Similarly, a responsible person’s knowledge that payments are being made to other creditors after the responsible person has become aware of the employer’s failure to pay trust fund taxes is sufficient to constitute willfulness. Crutcher v. United States, N.D. Ala., 2002-1 ustc 50,289.
Neither a bad motive nor a specific intent to defraud the government is a necessary element. 3 Knowledge of the duty has been held to satisfy the willfulness requirement, as has the reckless disregard for known risks. 4 For example, where the president of the board of directors knew of the company’s history of tax payment problems and of the company’s current, steadily increasing tax liability, the taxpayer was held to have recklessly disregarded a known risk that taxes were not being paid. Jefferson v. United States, CA-7, 2008-2 ustc ¶50,587. More than mere negligence is required, 5 however, and a person is not subject to the Code Sec. 6672 penalty if the non-compliance is unintentional, Winchester v. IRS, E.D. Mich., 88-1 ustc ¶9237, 686 FSupp 605, or if, as a result of negligence, he or she is unaware of the default in the payment of withholding taxes. Calderone v. United States, CA-6, 799 F2d 254. Voluntary use of alcohol and narcotics may be incapacitating, but it is not a defense to liability. United States v. Landau, CA-2, 98-2 ustc ¶50,667, 155 F3d 93.
2. United States v. McCombs, CA-2, 94-2 ustc ¶50,363, 30 F3d 310; Caterino v. United States, CA-1, 86-1 ustc ¶9452, 794 F2d 1, 6, cert. denied, 480 US 905; Powers v. United States, CA-2, 2001-1 ustc ¶50,338, 5 FedAppx 97; Rocha v. United States, D. Ore., 2001-1 ustc ¶50,425, 142 FSupp 2d 1277; Thosteson v. United States, M.D. Ala., 2001-2 ustc ¶50,653, 182 FSupp 2d 1189, aff’d, CA-11, 331 F3d 1294; Cook v. United States, FedCls, 2002-1 ustc ¶50,328, 52 FedCl 62; In re Howard, E.D. N.C., 2003-2 ustc ¶50,683, 301 BR 456.
4. Wright v. United States, CA-7, 87-1 ustc ¶9130, 809 F2d 425; Mazo v. United States, CA-5, 79-1 ustc ¶9284, 591 F2d 1151; Monday v. United States, CA-7, 70-1 ustc ¶9205, 421 F2d 1210; In re Fry, E.D. Mo., 91 BR 69; Phillips v. United States, CA-9, 96-1 ustc ¶50,057, 73 F3d 939; Johnson v. United States, D.C. Md., 2002-1 ustc ¶50,267, 203 FSupp 2d 416, aff’d, CA-4, 2003-1 ustc ¶50,345, 50 FedAppx 113, cert. denied, 124 SCt 60; Finley v. United States, CA-10, 97-2 ustc ¶50,613, 123 F3d 1342; Kalb v. United States, CA-2, 74-2 ustc ¶9760, 505 F2d 506, cert. denied, 421 US 979; Malloy v. United States, CA-11, 94-1 ustc ¶50,145, 17 F3d 329; Pitts v. United States, D.Ariz., 2001-1 ustc ¶50,419.
The facts of this case are similar to those of U.S. District Court, So. Dist. N.Y., United States of America, Plaintiff v. Alexander Burger, Irwin Goldfeder and Alan J. Levy, Defendants [89-2 USTC ¶9452]. In this case, the minority stockholder-director of a bankrupt family corporation with unpaid tax liability was not a responsible person for purposes of the penalty for the failure to pay over withheld taxes. Such individual lacked significant control over the financial affairs of the corporation, did not have the power to sign checks, and did not make decisions involving the disbursement of funds.
Mr. C****** was a minority stockholder and President of T** Inc. and was not responsible for paying any creditors and any payroll taxes. Mr. C****** lacked significant control over the financial affairs of the corporation, did not have the power to sign checks, and did not make decisions involving the disbursement of funds.
The final authority over T** Inc.’s financial affairs for tasks, including but not limited to writing checks, paying creditors and paying payroll taxes and wages, was not with Mr. C******. Instead, the final authority for all of T** Inc.’s financial affairs rested with those officials who were located in the headquarters office (Broomall, PA).
Mr. C****** is in the same position as the above noted cases in that he is not willful, since he did not have the final word as to what checks would be prepared. Further, Mr. C****** did not possess the right to dictate corporate policy including the payment of creditors. Additionally, Mr. C****** did not voluntarily, consciously, and intentionally pay employee withholding taxes to the IRS.
Mr. C******’s primary responsibility was to oversee the Sales Division. He was not regularly involved in the payroll process.
Mr. C****** did not have ultimate authority over T** Inc.’s financial affairs and therefore is not considered a “Responsible Person” under IRC §6672. Mr. C****** was responsible for generating sales for T**, Inc.
Further, Mr. C****** was not involved in the payroll process and any other administrative matters of T** Inc. Mr. C****** was responsible for the Sales Division within T**, Inc. and consequently, did not willfully fail to pay the employees’ withholding taxes to the IRS.
Mr. C****** should not be held liable for the unpaid employment taxes from T**, Inc.
As noted above, Taxpayer reserves the right to file one or more supplements to this protest, as appropriate. We would be pleased to discuss with you a schedule for resolving this appeal promptly.
Under penalties of perjury, I declare that this protest was prepared under my supervision and although I do not know of my own knowledge if the facts contained herein are true, on the basis of the information furnished me, I believe them to be true and correct.
Tom W was part owner of a corporation that got behind on its 941 payroll taxes. The company was having cash flow problems and instead of sending the IRS the employee withholding taxes they used the money to pay other company payables thinking they could catch up when business started to pick up. Unfortunately, business did not pick up as expected and they fell further behind on the payroll taxes. By this time they owed about $90,000. They hired a company who promised to get the debt settled for pennies on the dollar and the company did nothing for them. The IRS was getting ready to levy the company’s assets and shut the company down when Tom hired us. We were able to get a 30 day hold on the IRS taking further action and got Tom to send us the company’s current financial information. We did a financial analysis which revealed that the company could afford to pay the back taxes in monthly payments and stay current on their current payroll taxes if the IRS would allow them to stay in business. The IRS agreed with our assessment and approved the plan.
“My former business partner made some poor decisions that left me with some problems. I retained a company that said all of the right things but did nothing at all. Then I found Federal Tax Professionals. I wish I’d found you first. Everyone there is professional, and they get results. You were able to take a complex and messy situation and turn it into something I can handle with no problems!

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