As covered previously, Payroll Tax Debt issues are among the most complex and potentially the most damaging tax debt cases that we see in our Richardson, TX tax office. First, there are the potential penalties that can create a financial hole that’s almost impossible to dig out of. Then, there’s the personal liability under the Trust Fund Recovery Penalty (TFRP) which can create personal liability for both owner’s and other parties considered to be “Responsible Persons”. Finally, while not common, if the Taxpayer makes the wrong choices, a civil issue can become criminal.
Payroll Taxes are a high priority for the IRS and criminal prosecutions are up 300% over recent years. Remember that payroll taxes are not income taxes, where there is simply the failure to pay taxes. With Payroll Taxes, the employer is holding on to their employee’s payroll withholdings and have a fiduciary responsibility to protect those monies.
What are some of the criminal statutes for tax prosecutions?
- IRC Section 7202 makes it a Felony for willful failure to collect or pay over tax.
- IRC Section 7215 is a misdemeanor statute for similar actions.
- IRC Section 7201 is for Tax Evasion.
- IRC Section 7206 for False Subscription.
- IRC Section 371 is for Conspiracy.
The primary criminal statutes are IRC Section 7202 (Felony) and IRC Section 7215 (Misdemeanor) for Trust Fund issues but the other Sections are used for criminal prosecution as well. With Criminal Penalties as an alternative to the Federal Government, it is imperative that taxpayers with Payroll Tax issues make the right decisions and respond to the IRS Form 4180 interview in a manner that handles criminal, as well as civil penalties, in mind.
Do You Need Help?
With both business and personal tax liability and the risk of criminal liability, Payroll Tax Debt is an area where professional help and experience can make the difference between and good ending and a terrible one. If you need professional 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 bob@jablonskyandassociates.