Payroll Tax Disputes/Trust Fund Recovery Penalty

Payroll Tax Disputes

Every employer has a legal obligation to withhold Social Security tax, income tax and Medicare tax from employee paychecks. The employer is required to hold this money in trust for the government and submit annual tax payments. If an employer does not make these deposits to the government, they may face civil penalties and fines, and in the most serious cases, even criminal charges. In fact, in appropriate situations, the IRS has the ability to criminalize the failure of a business to pay over payroll tax liabilities. Accordingly, a business and its owners who have fallen into financial distress and have failed to pay over payroll tax liabilities to the IRS must be extremely sensitive to the possible criminalization of this behavior. Additionally, the IRS can aggressively try to collect these delinquent liabilities.

Worker Misclassification

In some instances, the IRS and State agencies challenge how a business classifies its workers as either independent contractors or employees of the business. In appropriate circumstances, workers do qualify as independent contractors versus employees for federal and state tax purposes. Unfortunately, a misclassification, even an innocent one, can have very severe ramifications and can be very costly to a business. Our attorneys have significant experience in the analysis and established tests developed under the tax laws and can initially consult on and provide advice on the proper classification and/or can defend against a reclassification by the IRS or State taxing agencies.

The Trust Fund Recovery Penalty

The IRS does not tolerate nonpayment of payroll taxes and will use aggressive collection efforts to secure these outstanding tax liabilities. In accordance with the Trust Fund Recovery Penalty, the IRS can seize company assets to satisfy past due payroll taxes. In addition, owners of small businesses and those in a position to collect/pay payroll taxes can also be held personally liable for the business’ delinquent payroll liabilities. In these cases, the IRS can place liens or levies on personal property and accounts.

Finding Solutions to Payroll Tax Disputes

For those facing audits or collection regarding payroll taxes, dealing with the IRS can be confusing and intimidating. However, it is important to remember that you have legal rights and there may be many available options for favorably resolving your matter. The key is to work with an experienced tax lawyer.

At Terrence A Grady & Associates Co., L.P.A, our lawyers excel in negotiating with the IRS for fair repayment terms and also have significant experience appealing IRS determinations in Trust Fund Recovery Penalty cases. All of our lawyers have advanced degrees in taxation and are able to quickly identify best options for resolution based on the specific circumstances of each client. Whether an accounting mistake was made, or if you simply got behind in payroll taxes and could not catch up, we will help find a solution you can live with.

Contact Our Ohio Attorneys

Contact our Columbus law firm to discuss your options for resolving a civil payroll tax dispute.