Skilled Payroll Tax Attorneys For Employers
Payroll tax liabilities represent the taxes collected by an employer on behalf of an employee, as well as the employer’s portion of the taxes. These taxes are required to be paid to the Internal Revenue Service. Many small businesses fall behind in paying these liabilities. Once a business falls behind, it is very difficult for it to catch up.
When a company falls behind on paying payroll taxes, it needs to obtain legal counsel to protect its interests. David Coffin PLLC in Southlake, Texas, represents businesses that have failed to meet their payroll tax obligations to the IRS.
We work to get companies back on track and to protect individuals—such as owners, officers, managers, or employees—from personal liability when a company fails to pay. Payroll taxes are due regularly, and during difficult financial times, many businesses fall behind. If you’re unsure whether you could be held liable for unpaid payroll taxes, we can help you understand your rights and responsibilities.
Facing IRS Challenges? Get the Representation You Deserve!
Our attorneys have helped many businesses resolve their payroll tax liabilities problems. Retain us, and we can answer your questions about payroll taxes, such as whether the IRS will shut down your business, and if so, if you will still be required to pay payroll taxes. It is important to seek legal counsel immediately when your company begins to fall behind; however, we can help you whether or not the IRS has already become involved.
Payroll Taxes In General
Generally speaking, payroll taxes paid by a company are made up of three components:
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Social security tax
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Medicare tax
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Employee’s income tax withholdings
These taxes are broken down into two groups:
Employer’s Portion
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Social Security
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Medicare
Employee’s Portion
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Social Security
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Medicare
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Income tax withholdings
The IRS calls the employee’s portion the “trust fund” taxes because the company is supposed to be holding these taxes in trust for the employees, which are to be paid over to the IRS.
Payroll taxes are usually required to be paid or deposited regularly, sometimes after each payroll. Unfortunately, many companies with cash flow problems delay payment, treating the IRS as a creditor of last resort. Because the IRS doesn’t immediately pressure businesses, it’s easy for taxes to go unpaid for months—causing the amounts owed to accumulate significantly.
Personal Liability Depends On Structure Of Business
Sole Proprietor – Owners Liable For 100% Of Payroll Taxes
Sole proprietors (Schedule C filers) report business income and expenses on their individual returns. If payroll taxes go unpaid, the owner is personally liable for the full amount.
General Partnerships – All Partners Are Liable For Unpaid Payroll Taxes
In general partnerships, all partners are liable for the debts of the business—including unpaid payroll taxes.
Corporations, Limited Partnerships, And LLCs – “Responsible Persons” May Be Liable For Trust Fund Portion
For corporations, limited partnerships, and LLCs, the IRS may pursue collection from individuals considered “responsible persons” who willfully failed to remit trust fund taxes.
Responsible Persons
The IRS uses several factors to determine who is a responsible person, such as whether an individual:
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Determines financial policy
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Authorizes payments to creditors
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Signs or authorizes payroll tax returns
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Knows taxes are unpaid
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Approves payroll or federal tax deposits
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Has access to banking credentials (EFTPS)
Even lower-level employees with check-signing authority may be deemed responsible if their duties suggest significant financial control.
What Is Willfulness?
Once someone is deemed a responsible person, the IRS evaluates whether that person willfully failed to pay the payroll taxes. If the business paid other creditors while knowing taxes were unpaid, that’s usually enough for a finding of willfulness.
The IRS often finds upper management liable, but even clerks who sign checks knowing taxes are overdue may be held accountable.
Ignore The Trust Fund Recovery Penalty At Your Peril
Payroll tax liabilities are treated differently from income tax liabilities. Penalties for failing to pay these taxes can be severe. If you receive notice that a “trust fund recovery penalty” has been proposed against you (IRS Letter 1153), you need to protect yourself.
This penalty can be imposed personally against company officers and anyone who has check-signing authority. Once this penalty is assessed, it is difficult to avoid IRS collections efforts.
Further, payroll tax debts are different from other tax debts in that they are assigned locally to individual IRS revenue officers who are very aggressive and take their jobs very seriously.
The best path is to avoid the issue altogether by retaining qualified attorneys who can work out your tax issues with the IRS and potentially avoid the trust fund recovery penalty.
Owe Payroll Taxes? We Can Protect You And Your Business.
If you have been contacted by an IRS revenue officer for an interview to discuss a company’s failure to pay payroll tax (IRS Form 4180), it is important to seek an experienced tax lawyer who can protect you and your business from the negative financial and personal consequences. Whether you use David Coffin PLLC or another, it is imperative that you seek counsel immediately.
For more information about how we can help you or your business resolve a payroll tax issue, contact us at David Coffin PLLC in Southlake, Texas, today. You may reach us online or by calling 817-251-7049 .
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