A quick look at the trust fund recovery penalty

Dealing with accounting and payroll taxes can be a nightmare, primarily thanks to the IRS. It’s rules and regulations, as well as IRS tax law, dictate how these matters should be handled, and any misstep, even those that are seemingly minor, can have enormous ramifications. For this reason, businesses, business owners and others who are responsible for handling payroll taxes should think about seeking out legal assistance when accused of mishandling tax-related matters.

This may especially be the case when accused of being subjected to the trust fund recovery penalty. This penalty is imposed upon those who are responsible for withholding or collecting employment and/or income taxes but who fail to do so in accordance with the law. The penalty only comes into play when the party who bears this responsibility willfully fails to live up to it. There is no need for the government to prove intentional wrongdoing, though. In fact, so long as the IRS can show that a party knew or should have known of owed taxes and disregarded the requirement or was indifferent to it, then it can legally impose the trust fund recovery penalty.

There are a number of ways to approach this legal issue. One way is defend against the IRS’s determination that the person accused was not actually responsible for collecting or withholding taxes. Here, the IRS may interview an individual to obtain a fuller sense of his or her duties within the organization, which could be key to a determination of liability. Trust fund recovery penalty relief may also be obtained if it can be shown that the failure to adhere to the IRS law did not occur willfully. This type of defense is affected by the facts at hand.

IRS penalties can threaten the financial well-being of individuals and businesses alike. When these penalties go unpaid, even harsher penalties can become a reality. To protect one’s financial security and ensure that the IRS doesn’t overstep its bounds, those confronted with IRS tax law issues should think about discussing the matter with an experienced attorney of their choosing.