Trust Fund Penalty Assessment Interview

What Is A Trust Fund Recovery Penalty Interview?

A trust fund recovery penalty interview and investigation permits the IRS (Internal Revenue Service) to collect unpaid taxes from businesses and assets of the individuals involved in the finances of the business. If the IRS believes you to be responsible for the trust fund taxes, they will request an interview with you. The purpose of this interview is to figure out if you are responsible for the recorded unpaid taxes or not. The IRS form is called a 4180 because the IRS agent will ask questions from the Form 4180 (Report of Interview With Individual Relative to Trust Fund Recovery Penalty).

What Is The “Trust Fund” In Regards To Form 4180?

A “trust fund” is a type of tax that makes up most of the payroll taxes due to the United States Treasury. Payroll taxes are withheld on behalf of the employee in trust for the US Treasury. Employers are responsible for taking the employees money and sending it to the IRS on behalf of all employees. The amount of money the employee owes to the IRS is what is called “trust fund” taxes.

 

When the IRS does not receive any money on behalf of the employee from a business, The IRS will then try to collect this trust fund tax by imposing form 4180

How to Avoid the 4180 Interview if Liable?

The best way to get out of the interview is to pay the bill and cancel the interview. You could also admit being liable by signing the Form 2751 (Proposed Assessment of Trust Fund Recovery Penalty) and then try to set up a payment plan or apply for a settlement. If the bill is under $25,000, the business should be able to pay it back over a 24-month period. Once a business sets up payments, you no longer have to worry about any personal assets being at risk.

Examples of Personal Assets

Automobiles

Jewelry

Furniture

Checking Account

Savings Account

How to Avoid the 4180 Interview if Not Liable?

If you are not responsible for the payment you can argue your liability. However this can be extremely difficult and it’s recommended to get a tax professional to assist you. Then, the tax professional will have to prove that you are not responsible for the unpaid tax even if you were involved with the company finances. Let’s say you accidentally signed off on a tax but you aren’t really liable, a tax professional can assist with that situation as well.

How Can One Survive A Trust Fund Interview For Back Payroll Taxes?

If you are the person responsible, accept the fact you are being held accountable for trust fund taxes and move on to resolving the debt that follows. However, if you should not be held responsible then it’s worth the fight. The numbers can be huge, the more employees, the bigger the liabilities will be.

Some reasons why trust fund is assessed when it should not be:

Next Steps:

Being honest and upfront is the fastest way to get this matter resolved. Although you may feel liable it’s best to contact a tax professional to verify and assist you with moving forward. If you believe yourself to be innocent and should not be held accountable, there is help out there for you. We are that help, please contact us for any questions or assistance with your current situation. Check out more of our tax problem resolution services.

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