According to the IRS obligations an employer is suppose to withhold employment taxes from the payroll of employees and pay that to the IRS, these are known as “Trust Fund Taxes” or Payroll Taxes. If employer is unable to meet this obligation it means that employer has to face a Trust Fund Tax Liability.
The IRS aggressively implements the Trust Fund Taxes, no matter how old the tax debt is, the IRS takes the payment from the business owner. This means that if you owe delinquent Payroll Tax, you must address the liability and find a solution.
According to the report generated by IRS, almost 2 million businesses owe almost $50 billion in Payroll Tax. Due to this huge amount in debt related to trust fund taxes, IRS is becoming very active in taking these debts from the business owners. The IRS is increasing its enforcement actions, so the probability of facing a lien, levy or other action may be increasing.
How to find out if your business has a Trust Fund Tax Liability
There are two ways through which business can determine if it has Trust Fund Tax Liability:
- Whether you are “responsible” for collecting or paying withheld income and employment taxes, or for paying collected excise taxes
- Whether you “willfully failed” to collect or perform your obligations
Typically, the IRS has the right to take enforcement action against anyone who meets these determinant tests, even if they were not an officer or employee of the corporation which originally collected the payroll taxes.
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