Regardless if the taxpayer has satisfied his/her lien, has not attempted to establish a payment plan with the IRS, or is already in an installment agreement, the best course of action is to contact Creative Tax Solutions so our team can ensure that the right steps are taken to mitigate the situation and improve your credit.
Past Due Returns
It is important to file all tax returns that are due, regardless of whether or not you can pay in full. To qualify for tax relief, wage garnishment removal, bank levy, Offer in Compromise or an installment plan, you must first file all past due tax returns.
For many reasons, it’s important to file your past due return now. You can avoid interest and penalties, claim a refund (which would be great!), protect your social security benefits, avoid issues obtaining loans, and be able to request an installment agreement or qualify for an Offer in Compromise if you owe more than you can pay.
If you’ve lost your records for any previous years, the Creative Tax Solutions team will be able to locate this information through our online account with the IRS. We will also provide tax planning and prepare tax returns for individuals, businesses, and other entities, and can focus on preparing returns for multiple years, multiple states, and for non-filers.
Our highly trained and tax specialists are able to prepare and file your returns with the IRS and state tax agencies and will negotiate a resolution on any resulting back taxes (including penalties and interest). We will also be able to help you achieve current status with your tax return filing obligations, as well as analyze your financial situation to determine the best course of action for future years.
941 Trust Fund Liability
To encourage swift payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for Trust Fund Liability. These taxes are called trust fund taxes because the business owner actually holds the employee’s money in trust until he/she makes a federal tax deposit in that amount. The IRS is very aggressive in their collection of delinquent payroll taxes. If a business has employees but has failed to pay payroll taxes or file payroll tax returns, the IRS may levy assets of the business. All individuals involved may be held personally liable for debt owed by the business because of the special nature of these taxes.
When employers pay wages and salaries to employees, the law requires the employers to withhold FICA and income taxes, but does not specifically require them to segregate the withheld amounts from other funds (which is different that payroll taxes). These funds are most often referred to as trust fund taxes because they belong to the United States and do not merely represent a debt of the employers.
However, if these taxes are not paid over to the IRS, personal liability will be imposed on those individuals who were responsible for, but willfully failed to collect, account for, and pay the withholding taxes. The “trust fund recovery penalty” will be assessed against the parties deemed responsible for an amount equal to the unpaid withholding taxes.
If you are involved with a company that has outstanding payroll taxes, it is a smart decision to seek the professional assistance of the Creative Tax Solutions team. Our highly qualified tax professionals will negotiate on your behalf to minimize your exposure to personal liability and/or keep your business operating. We will be able to appeal the assessment of a trust fund recovery penalty, administratively contest the penalty, and negotiate an offer to settle the debt.