The IRS will take stringent action especially on businesses that has not paid the taxes. This is mainly because of the fact that the amount is taken by employer from the employee from his wages as taxes. If it is not paying then it is holding the amount which is not actually theirs. Hence, the punishments and consequences would be more severe in this case. Many companies would face heavy penalties which would hinder their overall business development to a great extent. The IRS even has the power to shut the company down which it has carried out in many instances.
Who is responsible?
If the amount collected as employment tax is not paid, the following members will be held responsible for it,
- Office of employee of the company
- Corporate director or shareholder
- Employee of partnership
- Applicable employees of an employment agency
- A member of the board of trustees
- A person who has the authority over the company
- Applicable employees of a payroll service provider
Trust fund recovery Penalty
The trust fund recovery penalty is not a monetary fine like any other IRS penalties levied. Instead it would put the collection responsibility on the person who has intentionally failed to remit the employment taxes that were held in the trust of the government. In addition to determining who’s responsible, the IRS must find that the individual wilfully neglected to pay the employment taxes. It would also carry on TFRP investigation and the revenue officer would secure an interview with the person or persons that may be responsible for the unpaid payroll taxes. The CPA Journal points out that if a specific individual refuses to submit to an interview, then the officer will most likely issue a subpoena to compel the person to do so. This article on Taxreliefprofessional.com offers a complete account of information.