Many small businesses have traditionally treated some workers as independent contractors. Of late, the IRS has conducted audits seeking to reclassify such workers as employees. In many cases, both the small business and the owner may be personally liable for the employment taxes which should have been collected. Do NOT go into such an audit without legal representation.
In any business, employers deal with payroll taxes – social security, Medicare and income tax withholding from wages. These monies with-held from wages are considered “trust fund taxes” by the IRS. The IRS takes the position that this money belongs to them. They believe that the employer is merely holding the money in trust for the government.
If your business has a payroll tax problem, you will face the Trust Fund Recovery Penalties. Federal law permits the IRS to recover trust fund taxes owed by a business from certain individuals, so called responsible parties. In determining responsible party status, the IRS considers whether the individual was responsible for accounting for or collecting such taxes, whether the person was responsible for turning over such money, and whether the money was paid.
If the IRS cannot get its money, it WILL ruthlessly pursue corporate offices, directors, owners or anybody with check signing authority, who paid any other entity when the IRS is owed its money.
The IRS shuts down businesses if it cannot recover the trust fund tax. The IRS also ruthlessly pursues individuals, not only for tax owed, but also for interest and penalties. In fact, the IRS has prosecuted several criminal cases arising out of failure to pay trust fund tax.
The country is in debt. The IRS is in business to raise money (out of taxpayers’ pockets). If your business is confronted with any Employment Tax-related issues by IRS, this will NOT be a friendly discussion.
Get help NOW from an experienced professional. Weinberg Law Firm has fought to keep businesses with payroll tax problems in business. As well as helped to limit the liability of those individuals connected to the business for over thirty years. We are proud of our record, the successes for our clients, and their testimonials.
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