Trust Fund Penalty Issues

[Jack from Ohio]

"Probably" is too soft a term. The IRS WILL look at all of her personal assets, including compensation for recovery of the trust fund taxes. After all is said and done, getting an OIC for the other penalties & interest is a possibility.

You are speaking exactly what we have seen in the past.

[kcjenkins]

michael, there is a huge difference between losing money in a business, or filing bankruptcy due to things outside your control, such as losing a business due to illness, etc, and using YOUR EMPLOYEE'S money as your own. Please don't treat them as the same thing.

[Mr. Pencil]

michael, there is a huge difference between losing money in a business, or filing bankruptcy due to things outside your control, such as losing a business due to illness, etc, and using YOUR EMPLOYEE'S money as your own. Please don't treat them as the same thing.

The IRS does have specific standards for processing an Offer in Compromise involving the Trust Fund Recovery Penalty, but they are not related to the reasons for non-payment (which at any rate we do not know in this thread). What worries me is the proposal to begin a personal payment plan on the TFRP while trying to settle the corporate debt which includes the same money. It kind of makes sense, and OICs must always be creative. And since you have already submitted financial statements, you are pretty far along. So, go for it--I guess you are going to anyway. Just remember that you have to get the client to agree as well as the IRS. Make sure she knows that if she doesn't follow through, it might cost her a lot of money.

[Richcpaman]

It is interesting to read about myself in the third person.

Maybe I have not been clear in my questions, and I don't want this to spin somewhere else...

She agrees to the TFP being assessed, and will pay that. She will have to do it with a payment plan, but she is goingto pay it the TFP.

What happens to the rest of the 941 taxes that are due, plus the penalty and interest?

It still is hanging out there. A corporate liability. If she continues to operate the business, the IRS can try to collect. They know there isn't anything there, so they will not be aggressive about it, but they haven't so far, and that may change, but they have the 433-A and 433-B's to know there isn't anything there. That is why the agent put this into Non-Collectible status. Really, in the long run, this has been hand to mouth for quite a while. No excuses there, but she isn't/wasn't jetting to the islands with Trust Fund money...

Had the IRS assessed the TFP earlier, then the IRS would have gotten ALOT more for the TFP. But they didn't. And it isn't that I haven't sent 5-6 different requests to the IRS in the past two years to set up a payment plan for some of the notices that they did send, that were ignored. It wasn't until finally WE called them, and the person at the call center finally said that the balance is too high, and you need to speak to an agent. That was 5 months ago... And no, I did not have all the notices or know the total amount when we sent in the request for the first or subsequent payment plans. I presumed the amount was less than $25k. Even the AGENT, after being assigned the case, and I asked her for ALL the outstanding liabilities, missed reporting $20k of them to me.... I was operating on the assumption that it was $71k, not $91K.

Now the next question, simply, is if she agrees to this assessment of the TFP, is she opening up any other issues? I do not believe so, but just in case, I want to be sure. Once the agent realized that there were no $$ to be gotten, she proposed the TFP assessment. I wanted to make sure there wasn't something I was missing.

Outside of my client being a criminal, not much, I guess.

Rich

[Jack from Ohio]

Rich,

It appears that you are not listening....

[Mr. Pencil]

>>I wanted to make sure there wasn't something I was missing. Outside of my client being a criminal, not much, I guess.<<

That's the kind of gentle sarcasm I enjoy, Rich, and so much the better when it is wasted. Still, I don't think they are saying your client is a criminal. I think they mean she is a sinner. of which non-sinners seem to have a particular understanding.

Forget about the OIC. The corporation is in non-collectible status, and it has nothing to offer in compromise anyway. You'll get another chance to deal with it next year. Meanwhile, set up the payment plan. Ask your client how much she can safely commit to. Then cut that in half, and scream and swear at the agent until it is accepted.

[Richcpaman]

Mr P.

I ususally wait to post sometimes, because I can be sarcastic. And I deleted some things that would have been un-helpful to say the least. And really, there is no point to it. And really, I find taxes alot of fun. Becasue they are PITA.

Something bothered me about the way that this agent presented this TFP request. I don't know why it bothered me. It just did.

I know the path that we are on. But something seemed off. I was wondering what it might be.

There really isn't anything else.

Thanks for all the help.

Rich

[joanmcq]

She'd be better off trying to pay off some of the taxes due, rather than the penalty. That is the advice I'd give. And make sure the payments are marked to be applied to the trust fund taxes first. I don't know why you are so concerned about the TCP over any of the taxes due.