A small or medium business can be destroyed with payroll tax polemics. It also has a disastrous influence on business owner's personal finances. Such polemics often arise when businesses fail to timely file employment tax returns and/or when businesses fail to timely remit their employment taxes to the IRS. The IRS will appoint the matter to a Revenue Officer, which job is to interview the taxpayer.
The trust fund recovery penalty is the mechanism whereby the IRS sidesteps the protections of the taxpayer's legal essence to tax a personal duty on each individual who could have seen to it that the taxes were paid. Besides, the IRS refers to these people as "responsible persons." So, the penalty is imposed on "responsible persons" each individual. And it is equal to 100% of the unpaid taxes at the time that the Revenue Officer assesses the penalty.
Hiring an experienced tax lawyer at once will be the purpose of those taxpayers who find themselves subject to this penalty. There are many cases when the tax lawyer are be able to persuade the Revenue Officer that the taxpayer is not a "responsible person" or make other taxpayer-favorable payment arrangements. In this way he may avoid the trust fund recovery penalty altogether.
But in other cases the tax lawyer can help to build a case that the IRS determination as to who is the "responsible person" is wrong. Revenue Officers do not add this information to the case file without strong pressure to do so. But these must be included in the IRS record.
Taxpayers may miss these opportunities. If this has happened then they still may be able to ask a different function or branch of the IRS for removing the penalty. In case that fails, taxpayers can ask the courts to rule that the IRS was wrong in determining that he or she was a "responsible person" and imposing the civil trust fund recovery penalty.
If the taxpayer has failed to timely file employment tax returns, this can be really difficult. Thus the Supreme Court, in a case that is often cited by the IRS in the payroll tax context, essentially said that there is no excuse for filing a late tax return. This feeling is echoed by the number of courts.
To help, to remove, solve or minimize the damage that employment tax polemics have on small and medium sized businesses and their owners, are tasks of an experienced and creative tax lawyer.