Operating a business in Maryland comes with many responsibilities. One of the chief requirements is that a business owner must provide trust fund taxes to both state and federal governments. Owners must hold the taxes that their employees provide in the form of income tax, Social Security tax, and Medicare taxes, withholding them from every paycheck – in addition to paying the business’s own portion. Alleged failures to hold these funds in trust or make timely payment can result in a Trust Fund Recovery Penalty (TFRP).
The Internal Revenue Service (IRS) will investigate any alleged failure to pay these taxes. Penalties can include an individual being held personally liable for any missing funds, as well as interest on the unpaid taxes. It is important to pay these funds in order to avoid penalties. A Rockville trust fund recovery penalty lawyer could help with investigations into unpaid employment taxes and the determination of the related responsible parties.
All businesses in Maryland must understand their role in providing taxes to the government. This includes not just their own taxes, but also the taxes of their employees. Every worker must provide taxes on their income to fund Medicare, Social Security, and other government programs. The worker’s employer is responsible for withholding these amounts from their paychecks every pay period.
These employers must hold these funds in trust until the time comes to remit a payment, via Form 941. A failure to do so makes the owner – and potentially other parties responsible for remitting to the government – liable for the Trust Fund Recovery Penalty, which is equal to the amount of owed taxes that the government did not receive. If the IRS plans to assess a TFRP to someone, then a Rockville trust fund penalty lawyer could help in properly establishing that that person was not the one responsible for remitting the taxes.
To impose a trust fund penalty, the IRS must be able to prove that a party was responsible for withholding these taxes and providing payments on schedule. In addition, the IRS must also prove that a failure to remit the trust fund taxes was done with the knowledge that the person was required to do so.
As a result, it might be possible for a local trust fund recovery penalty attorney to provide evidence to the IRS that the person under investigation was not responsible for collection and payment of employment taxes. This might mean that the subject was not a designated agent to serve in this role or that the individual was not aware or should have been aware that a failure to collect payments had occurred.
If it is determined that the business must pay the taxes in question but it is currently not in a financial position to do so, a lawyer may be able to get the IRS to agree to an alternative collection effort, such as an offer in compromise (which reduces the overall tax burden) or an installment agreement (which consists of monthly payments instead of one full payment).
Businesses have an obligation to manage the funds that they withhold from their employees’ salaries as a government tax. But there can sometimes be confusion over how that money is to be managed and who is responsible for reporting it. An attorney could help identify realistic goals and navigate a sensitive situation so that it does not escalate into something that could put the business at risk. Contact a Rockville trust fund recovery penalty lawyer today to learn how they could help you.
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, Vienna, 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.