Payroll Tax & Trust Fund Recovery Penalty

Payroll Tax & Trust Fund Recovery Penalty 

Our Pennsylvania Tax Lawyers Can Help You Get Back to Business

Employers and businesses in the state of Pennsylvania are required to withhold 3.07% of their employee's wages. If the employer fails to do this, the IRS can levy severe penalties that would cripple many small or medium-sized businesses into bankruptcy. Our job at J. M. Sells Law is to make sure that doesn't happen to you. 


Call us at (412) 459-7480 to learn more. 


IRS Trust Fund Recovery Penalty: How It Works 

Section 6672(a) of the Internal Revenue Code holds employers accountable for withholding federal income tax from their employees' payroll and paying them to the IRS. These are known as "trust fund taxes." If the IRS determines that the employer is subject to a penalty, they can hold them liable to remit the total amount of unpaid tax owed to the U.S. government, plus interest.

There are two primary tests to determine whether an employer is subject to a trust fund recovery penalty as per the IRC. They must:

  1. Have the obligation to withhold, collect, and pay trust fund taxes to the IRS, and
  2. Willfully fail to make good on that obligation

In order to determine that you're liable for a trust fund penalty, the IRS first has to prove willfulness on your behalf. In other words, they have to prove that you intentionally hid payroll taxes from the IRS and used them to pay your own business expenses. 

How to Settle Payroll Tax and Trust Fund Recovery Cases

It's easier to get into situations like this than you might think. Small- and medium-sized businesses have a million things to manage, and even small oversights can be perceived as willfulness in the eyes of the IRS. Whether or not you intentionally failed to withhold your employee's payroll taxes, you still need representation when the IRS hits you with a trust fund penalty. 

J. M. Sells Law is here to advocate on your behalf, and guide you through this dense and complicated area of tax law. We can prevent the worst from happening, safeguard your assets, protect your reputation, and work toward the best possible outcome.  


Call (412) 459-7480 to get your free case analysis, and solve your payroll tax problems today! We can also be reached via our online form.


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