What is Trust Fund Penalty?

A Trust Fund in terms of employment tax should not be mistaken with a trust fund in terms of wealth management. This is the payroll tax amount assessed to the officers of the business. Tax resolution can help reduce and or arrange the payment of these taxes.

What is a Trust Fund Recovery Penalty (TRFP)?

A Trust Fund Recovery Penalty can be assessed if the unpaid trust fund taxes cannot be immediately collected from the business. This often happens if the business falls on hard times and taps into that fund for any reason. According International Revenue Code 6672(a) an individual can be held liable for penalty for willful failure to collect, account for, or pay to the IRS the taxes for the business.

Who is Held Responsible for the TRFP?

According to the IRS, the TRFP can be assessed against any person who is: responsible for collecting or paying withheld employment taxes, willfully fails to collect or pay the taxes.

Payroll Tax Due Dates: January

In our recent blog posts, we’ve been discussing payroll taxes. In our first post in the series, Tax Resolution for Businesses: Payroll Tax, we covered the basics, answering questions like what are payroll taxes and when do you have to deposit payroll taxes? In the next two posts, we dove deeper into the specifics regarding payroll tax reporting, with our most recent post, Tax Resolution for Businesses: Payroll Tax Special Reporting, discussing some of the special payroll tax reporting circumstances. If you haven’t read them yet, we’d recommend checking them out before continuing with this post.

Today, and in the next few upcoming articles, we’ll discuss the different payroll tax due dates. Each of the first four months of the year have certain required payroll tax deposits or filings. So we’ll break it down month by month so business owner’s everywhere have a resource they can visit during tax season to keep them up-to-date on their payroll tax requirements. And if you didn’t know, it’s tax season right now! So bookmark this page, we’ll have more payroll tax-related posts coming up.

Payroll Tax Due Dates: January

As of January 22nd, 2021, according to the IRS Page Employment Tax Due Dates, the following forms are required to be filed as of January 31st each year:

“File Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. However, if you deposited all of the FUTA tax when due, you have 10 additional calendar days to file.
“File Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees if you paid wages to one or more farmworkers and the wages were subject to social security and Medicare taxes or federal income tax withholding under the Form 944, Employer’s Annual Federal Tax Return, for the previous calendar year instead of Form 941 if the IRS has notified you in writing to File Form 944.”

As you can see, the last bullet is specific to employer’s in the agricultural industry, so if that doesn’t apply to your business, you can disregard it. The list of required filings by January 31st on the IRS Page Employment Tax Due Dates continues, with the next one you’ll read clarifying how to report withheld federal income tax:

“File Form 945, Annual Return of Withheld Federal Income Tax, to report any nonpayroll income tax withheld in the previous year. If you deposited all taxes when due, you have 10 additional calendar days to file. See Nonpayroll Income Tax Withholding under Reminders in Publication 15 for more information.
“File Copy A of all paper Forms W-2, Wage and Tax Statement, with Form W-3, Transmittal of Wage and Tax Statements, or file electronic Forms W-2, with the Social Security Administration (SSA) to report wages, tips and other compensation paid to an employee. For information on reporting Form W-2 information to the SSA electronically, visit the SSA Employer W-2 Filing Instructions & Information Web page. See SSA Publication No. 42-007 PDF for help in electronically filing Forms W-2.
“File Copy A of paper, Form 1099, Miscellaneous Income, with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, or file electronic Forms 1099, Miscellaneous Income with the IRS, when you are reporting non-employee compensation payments in box 7. See IRS Publication 1220 PDF (PDF) for help in electronically filing Forms 1099.”

If your business employs multiple types of employees, like a mix of 1099s, W-2s or agricultural workers, keeping track of the paperwork to file and the proper amount of payroll taxes to withhold, report and deposit can become a bit complicated over time.

That’s why we always recommend working with an experienced tax resolution specialist, like the ones on the Bullseye Tax Relief team, if you ever have any issues with payroll taxes, IRS paperwork or tax debt.

Bullseye Tax Relief offers a free initial consultation and transcript analysis to any new clients, so it’s truly risk-free to see what your tax resolution options are. Call us today at (844) 582-3323.

Sources:

https://www.irs.gov/businesses/small-businesses-self-employed/employment-tax-due-dates

Payroll Tax Due Dates: January

Payroll Tax Due Dates: January

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