Defending Yourself in an IRS Trust Fund
Recovery Penalty Assessment Controversy
In the current economic climate, many firms are having a hard time paying their bills and some choose to
borrow from Uncle Sam by taking employee withholding taxes and using...
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Defending Yourself in an IRS Trust Fund
Recovery Penalty Assessment Controversy
In the current economic climate, many firms are having a hard time paying their bills and some choose to
borrow from Uncle Sam by taking employee withholding taxes and using them for operating capital
instead of depositing them with the United States Treasury. IRS takes a very dim view of this unorthodox
practice and the interest and penalties can be severe. Many companies never get current and go under
owing IRS unpaid 941 Payroll Tax. Thus the do-it-yourself "loan" becomes an unpaid debt that the
corporation can't pay if it is liquidated with no assets to pay Uncle Sam.
When this happens, the corporate protection for shareholders, officers, and directors against debts owed to
company creditors does not fully apply. However, liability is limited to the trust fund and does not include
penalty, interest, or the corporate share of FICA. The unpaid trust fund may be recouped against these
persons upon investig
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