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In this series, we’ll discuss the Trust Fund Penalty, Assessment and the TFP Assessment Interview, also known as the 4180 Interview.

As we mentioned in our last series regarding Rush Tax Relief, Rush Tax Relief – Federal Tax Lien, rush tax relief services refer to tax resolution services that are expedited due to a timeliness factor. In some cases, rush tax relief services can be more costly on the front end. But hiring a tax professional can help you avoid penalties or fees. In more extreme cases like we discussed with the Federal Tax Lien, rush tax relief services can also help to prevent a tax lien from turning into a levy. This means the IRS has the ability to seize the assets that they had placed the lien against. 

So let’s start at the beginning. What do we need to know about it?

What is the Trust Fund Penalty?

As of Dec. 24, 2020, according to the IRS page, Employment Taxes and the Trust Fund Recovery Penalty (TFRP), the Trust Fund Recovery Penalty or TFRP, exists “to encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes.

These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount. You should remember that the TFRP may apply to your business. That is, if these unpaid trust fund taxes cannot be immediately collected from the business. Keep in mind, the business does not have to have stopped operating in order for the TFRP to be assessed.”

As stated in our Trust Fund Penalty Service Page, “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.”

TFRP Challenges

For many, going through TFRP process can be extremely challenging. A business could fall into hard times and be tempted to tap on the employment tax trust fund. It can turn to be really messy. If you have been notified by the IRS that the TFRP will be assessed against you, it will be best to contact a team of experienced tax relief specialists. Bullseye Tax Relief will be the best choice to handle the case. 

According to the IRS page, Employment Taxes and the Trust Fund Recovery Penalty (TFRP), under the section ‘Assessing the TFRP,’ the IRS states that if “we determine that you are a responsible person, we will provide you a letter stating that we plan to assess the TFRP against you. You have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal our proposal. The letter will explain your appeal rights.”

As you can see, in most cases, this gives you 60 days from the date of letter to act or appeal. If you have received this letter, it’s time to call a tax resolution specialist! Same page goes on to say “once we assert the penalty, we can take collection action against your personal assets. For instance, we can file a federal tax lien or take levy or seizure action.”

You do not want to let it get to that point! Working with a rush tax relief specialist can help you or your business avoid the IRS’s seizure or collection activities.

In our next blog post, Rush Tax Relief – Trust Fund Penalty Assessment, we’ll talk about the next step which is the Trust Fund Recovery Penalty Assessment.

Sources

https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes-and-the-trust-fund-recovery-penalty-tfrp

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