Trust Fund Penalty

Trust Fund Penalty

The IRS and the state can holds any person or persons they determine to have “willfully” chosen to not remit the payroll withholding amounts when due responsible, in addition to holding a company liable for unpaid payroll taxes which is called a Trust Fund Penalty.

The IRS and state usually begins with the owners of the company and the persons listed in the company’s bank signature card.

Once they compile a list they conduct interviews referred to as a 4180 interview (the IRS uses Form 4180 to record the interviewees responses).

If the IRS determines a person to be responsible and assessed the Trust Fund portion in the form of a Civil Penalty.  Once the determination has occurred, the responsible person has a limited amount of time to appeal the determination before it becomes final.  Once it becomes final the responsible person is held personally liable, which means they can garnish your wages or levy or bank account, or place a lien on your property.  If this is the case there are alternative to addressing the Civil Penalty such as an installment agreement or offer in compromise.

DMG Tax Relief has been successful in limiting the amount of people held responsible stemming from 4180 interviews.  Under certain circumstances, DMG Tax Relief will help you remove the civil penalty even if you are the stemmed as the responsible party.  If it is obvious you are going to be considered responsible and we can not remove the civil penalty, we usually can get your company into an agreement and have the IRS leave you alone personally.

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