IRS Trust Fund Recovery Penalty: aka Civil Penalties

Back Withholding taxes assessed to Corporate Officers and Business Partners

Does your business owe withholding taxes? Has some of that tax been assessed to you personally?

Achievable Dream Tax Resolution can help prevent, negotiate and resolve Trust Fund Recovery Penalties against corporate officers and partners.
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DID YOU KNOW? The IRS only has 3 years from when the withholding taxes were filed to assess officers or partners with the Trust Fund Recovery Penalty. This is called the ASED ("A-said") or Assessment Statute Expiration Date.

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Quick Facts about the IRS Trust Fund Recovery Penalty:
  • The Trust Fund = the amount of tax withheld from your employees' checks, plus half the employer matching.
  • The Trust Fund Recovery Penalty cannot be discharged in a bankruptcy.
  • All partners and corporate officers can be held personally liable for unpaid withholding taxes
  • The IRS will attempt to collect unpaid Withholding taxes from you personally, even if the business is paying the back taxes via installment agreement.
  • The IRS will in some cases accept an Offer in Compromise for the Trust Fund Recovery Penalty
  • When an officer or partner is assessed with the Trust Fund Recovery Penalty, all IRS tax refunds will be applied to the balance owed. If the IRS took a tax refund that belongs to your spouse, you may qualify for an Innocent Spouse claim.
  • Once the Trust Fund Recovery Penalty is assessed, there is no way to reverse the process unless you can prove that you were not responsible for the taxes owed. You can, however, negotiate on the balance just as you would any other back taxes.

TIP: If you send tax payments to the IRS (other than on a formal payment agreement), you can ask that they apply the money to the Trust Fund portion only.

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