Everything You Need to Know About Trust Fund Taxes and Penalties
Trust Fund Taxes and Penalties
Trust Fund Taxes as paid by individuals is a requirement by law. The Internal Revenue Service is a body that has the task of tax collection in the US, with the treasury receiving the collected amount in weekly and monthly schedules. The collection agency has the jurisdiction to impose penalties on defaulting parties through the Trust fund recovery penalty (TFRP). These penalties may also arise after failing to pay the total amount required by the law. Reasons for not paying are a non-issue to the government’s agency.
How Do Individuals Pay the Taxes?Employers are legally obligated to withhold their employees’ share of their Social Security and Medicare funds and their taxable income from the wages paid. Hence, employees entrust their bosses to do their taxes for them. Lateness or withholding the money collected from employees alerts the IRS to contact the business owner. The initial contact is a getaway free card that warns you to pay up as soon as possible.
Failure to follow the instructions given or inability to source the funds attracts an internal investigation in the company, known as the Trust Fund Recovery Penalty Investigation or TFRPI. The main goal of the investigation is to justify the collection of unpaid trust fund taxes. Here, it is crucial to seek professional assistance like hiring a tax attorney.
How Extreme Can IRS Go in the Tax Collection Process?
The agency has an absolute authority to collect business assets if the respective account’s funds cannot cater for the amount owed. Moreover, the penalty is always double the amount of withheld tax. For instance, the business will pay $20,000 plus a $20,000 penalty fee if the withheld taxable income is $20,000. Matters can get worse if the company has many employees.
As a business owner on the wrong side of the government, it is critical to act quickly to cover the financial damage. Charges and interest incurred depend on the waiting period. An experienced tax attorney comes in handy in that he doesn’t only save your business but also saves on time. However, the IRS tax help offers a reprieve to the defaulters by allowing them to appeal if they think the ruling was unfair. During the appeal, you can come up with a ‘compromise offer,’ which means you will pay the amount under your terms. The tax collection agency expects you to fulfill 100% of your self-formulated promise upon agreeing.
Tax knowledge is essential in any business operation. Payments owed are always on time, and employees’ rights like Medicare are catered and accounted for. However, non-professionals in tax knowledge get into problems with the agency from time to time. Hence, seeking professional help is definite to avoid adverse issues. Guardian Tax Law is a firm that can help solve your struggles with tax authorities by guiding you through what you and your company need to do to comply. Their professionalism proves equal to each coin you spend on them.
310 S Williams Blvd, Ste 260 Tucson, AZ 85711