As we in previous blogs, a priority of helping taxpayers who come into our Richardson TX, tax office with business Payroll Tax Debt, is avoiding or minimizing the impact of the Trust Fund Recovery (TFRP). When the IRS makes a TFRP assessment against an individual, that individual becomes personally liable for the trust fund portion of the payroll taxes. Visit my previous blogs to learn more about the TFRP.
One the TFRP has been assessed, one strategy to limit personal liability is to designate any payments made against the debt to the Trust Fund portion. If the business has assets that the IRS can seize and/or the business makes payroll tax payments, the IRS will apply those payments against the oldest debt first. It is possible to make voluntary payments against the Trust Fund portion. This will permit the TFRP amount to be reduced, while the employer portion and penalties and interest, that can only be collected against the business remain.
A few points to keep in mind:
- If you make a voluntary payment, make it either personally or thru a loan. Under Revenue Procedure 2002-26, you can designate it to the Trust fund portion versus the business taxes. Payments from the company can’t be designated.
- Deferred payment offers can be applied against the TFRP until an offer is accepted.
- If you do not designate, the IRS will simply apply against the oldest period first and likely the non-trust fund portion first.
While this can come into play with any payroll tax debt situations, it makes the most sense when there are limited resources and only a portion of the debt can be resolved. Stay tuned in the next few weeks as finish up covering Payroll Tax Debt!
Do You Need Help?
If you need help with IRS Payroll Debt or other IRS Collection issue, I’d be happy to talk with you. Please give me a call at (972) 821-1991 or email me at firstname.lastname@example.org.