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If you own a business, you must make certain federal deductions from your employees’ paychecks. These are often referred to trust fund taxes or, more informally, payroll taxes.
You must report and pay those deductions and your share of the Social Security and Medicare withholding quarterly, using IRS Form 941. Not reporting and paying those taxes when due could lead to IRS enforcement action. Contact a TFRP attorney immediately if you have problems relating to IRS Form 941 in Washington DC.
As an employer, you are obliged to withhold Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA) from your workers’ paychecks, as well as income tax. Every quarter you must report these deductions and submit them to the Treasury Department. You must also submit the employer’s share of the FICA taxes.
You could be subject to IRS enforcement action, including a potential trust fund recovery penalty, if you do not report and pay these taxes as required. Talk to a tax specialist in Washington DC if you have failed to file IRS Form 941 as required, or if you filed but could not pay the amount owing.
If your business has not fully complied with the laws regarding trust fund taxes, you have several options to bring them up to date. It is generally wise to take the initiative when you cannot pay what you owe rather than wait for contact from a Revenue Officer.
Notably, you can ask for an installment plan to catch up on the unpaid taxes. As part of an installment agreement, the IRS requires that you file and pay all subsequent trust fund taxes on time. This may require establishing an automated system to ensure trust fund tax is withheld and deposited in accordance with the law.
Failing to timely deposit the taxes due will carry hefty penalties called trust fund recovery penalties. This penalty is when the “employee portion” of the payroll tax can be collected from the personal funds of owners and officers of the company who were deemed to be responsible for the filing and payment of those payroll taxes. If you are contacted by an IRS Revenue Officer and your business has not timely paid its trust fund taxes, the IRS may be investigating to determine whether to impose the TFRP. Although the business normally pays the trust fund taxes, the person with financial decision-making authority can be held personally liable for the TFRP. The Revenue Officer will conduct an investigation to identify the person or people with financial decision-making authority for the business.
Thorough preparation for these investigations and interviews is essential. Someone in our Washington DC office can help you compile documentation related to the IRS Form 941 and represent you during an interview.
A failure to file IRS Form 941 in Washington DC or to pay the proper amount timely can lead to significant consequences. Contact Pontius Tax Law if you are having trouble complying with the law regarding trust fund taxes. Our staff includes former Revenue Officers with special insight gained from working within the IRS.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.
