In Chadwick v. Commissioner, a recent collection due process hearing (CDP) case, the United States Tax Court upheld an IRS notice of intent to levy. Chadwick v. Comm’r, 154 T.C. No. 5 (2020) stemmed from the taxpayer’s failure to pay employment taxes for two LLC entities for which he was responsible and the subsequent assessment of trust fund recovery penalties …
Section 6672(a) of the Internal Revenue Code, known as the trust fund recovery penalty, allows the IRS to collect unpaid payroll taxes from individuals who are found (1) to be responsible for collecting or paying withheld income and employment taxes on behalf of an employer, and (2) to have willfully failed to pay the taxes. The IRS generally only collects …
Federal tax law mandates that employers withhold payroll taxes from employees’ wages for the government’s account.[1]If your company is required to withhold, account for, and pay taxes— including non-resident alien withholding and employment taxes—but willfully fails to do so, you may be held personally liable for a penalty equal to the full amount of the unpaid trust fund tax.[2] Withheld taxes—typically …
A recent government report recommended that the IRS beef up its use of the Trust Fund Recovery Penalty and more liberally refer employment tax cases for criminal investigation. The report, issued by the Treasury Inspector General for Tax Administration (“TIGTA”), A More Focused Strategy Is Needed to Effectively Address Egregious Employment Tax Crimes, was somewhat critical of the IRS’s failure …
The IRS recently issued its annual Data Book, providing a glimpse into the world of tax administration during the past fiscal year. The recent release provides a number of interesting takeaways, but here are a few of the highlights: The IRS assessed $27.3 billion in civil penalties during FY 2016. The IRS assessed close to $12.5 billion in additional taxes …
A recent ruling by a federal Texas district court serves as yet another reminder of the exposure that business owners face when it comes to personal liability for the unmet payroll taxes of their businesses. In McClendon v. United States, the district court recently held a doctor-taxpayer/business owner personally responsible for $4.3 million of the business’s outstanding payroll taxes, upholding …
The Department of Justice recently announced another indictment of a taxpayer charged with evading the payment of “trust fund” taxes—taxes withheld from employees’ wages to be paid over to the government. The DOJ press release provides a succinct summary of the allegations and the relevant facts: Maria Larkin aka Maria Bella-Larkin, owned and operated Five Star Home Health Care Inc. …
For the past year, the IRS and the Tax Division of the Department of Justice (“Tax Division”) have touted a renewed and increased emphasis on employment tax enforcement—both civil and criminal. Indeed, employment tax enforcement is currently among the IRS’s and Tax Division’s highest priorities. Earlier this year, the Tax Division publicly warned that it has “sharpened its focus on …
