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“font-family: Verdana; font-size: 13px;”>Small and large businesses from time to time require an infusion of cash flow to keep the business afloat, perhaps temporarily. Some employers make a quick loan from the coffers of their payroll, using the federal tax withholding or social security withholdings of their employees in order to fund their business.
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>Take my advice. Do not use this money. It is far too costly. And in addition to that, it is
“mso-bidi-font-style: normal;”>not will be converted to your social security number. And enforcement action will be taken against you and your assets personally.Â
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>If you cannot make the federal tax deposits on time, let me offer you the following facts.
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>To encourage prompt payment of withheld and income and employment taxes, including social security taxes, Congress passed a law that provides for what is called the Trust Fund Recovery Penalty which equates to 100 percent of the withholding and social security taxes withheld from employees and
“mso-bidi-font-style: normal;”>not States.Â
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>Internal Revenue Code Section 6672 imposes a 100 percent penalty for failure to collect, truthfully account for and pay over any tax.Â
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>The Trust Fund Recovery Penalty – or 100 percent penalty, as it is sometimes referred to – is without prejudice. It may be assessed against any person who has the
“mso-bidi-font-style: normal;”>responsibility account for and pay over the employment tax to the Internal Revenue Service.Â
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>IRC 6672 defines a responsible person or group of people who has the duty to perform and the power to direct the collection, accounting and paying of trust fund taxes/employment taxes.Â
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>Churches are not exempt from the 100 percent penalty assessment. Churches are viewed as a business, and the pastor, his wife, the board of trustees or a congregant may be assessed with this penalty. Or all of them may be assessed.Â
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>Trust fund taxes may not be discharged in bankruptcy. They live on for 10 years from the date of assessment.
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>The Internal Revenue Service views those who issue a W-2 to their employees without paying the employment taxes as having passed out a bad check.
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>The 100 percent penalty is sometimes assessed against both husband and wife if they run a business together – perhaps sister and brother, pastor and first lady. And by the way the Internal Revenue Service may assess the same amount against
“mso-bidi-font-style: normal;”>all secure the entire amount.Â
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>Example: ABC Corporation failed to pay over $25,000 in trust fund taxes. That corporation was operated by husband and wife. IRS assesses the husband $25,000 and the wife $25,000, if both have been deemed responsible. IRS may convert this amount to the husband’s social security number and wife’s social security number. Don’t play!
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>Should the business not have enough money to make the federal tax deposits, downsize payroll. Take yourself off. Do not make net payroll and hope you will have enough for the tax deposits. Avoid the conversion to your social security number and be individually responsible.
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“font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>Alma M Scarborough owns and operates Scarborough’s Tax Affair (314-621-1402, “font-size: 10pt; font-family: Verdana;” lang=”EN-US” xml:lang= “EN-US”>
“text-decoration: none;”>www.taxhitlady.com “mailto:taxhitlady@sbcglobal.net”>
“text-decoration: none;”>taxhitlady@sbcglobal.net
