Employment Taxes and The Trust Fund Recovery Penalty (Video) (Course Id 2681)

In medieval England, the Christian Peter and Paul were two peas in a pod. They were both apostles and both martyred in Rome. They even shared the same feast day (June 29). So, the idea behind the phrase “robbing Peter to pay Paul” is that the victim and payee are similar in wisdom and stature (to borrow a phrase). The modern-day equivalent is taking a cash advance from one credit card to make the minimum payment on another one, assuming that they both have a similar interest rate. 

In this presentation, I will cover the basics of Form 941 taxes. Form 941 taxes represent the amount of money that an employer must withhold from his or her employees wages for remittance to the IRS. This includes social security, Medicare, and income taxes. We'll then discuss the Trust Fund Recovery Penalty. To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the Trust Fund Recovery Penalty (TFRP). Sec. 6672(a) imposes a penalty on any person who is “responsible” for paying payroll taxes and “willfully” fails to do so. 

We'll delve into the situations in which the TFRP arises, cover the procedures surrounding it, the defenses, how easy it is for the IRS to prove a case, what happens if your client loses, how the IRS applies TFRP payments, and tattle tailing on others.
 

Course Learning Objectives

• 1.How does the concept of willfulness affect the determination of liability for the Trust Fund Recovery Penalty?2.In what ways do the legal restrictions on assets held by an employer differ from contractual obligations in the context of TFRP liability?3.What are the implications of the IRS's policy to collect the Trust Fund taxes only once on responsible persons who may be assessed the TFRP?4.How might the reasonable cause exception, as recognized by some circuits, influence a responsible person's defense against TFRP liability?5.What factors contribute to the IRS's decision-making process when determining who is considered a responsible person under the TFRP?6.How does the statute of limitations impact the IRS's ability to assess and collect the TFRP from responsible individuals?7.In what scenarios might volunteers for tax-exempt organizations be exempt from the TFRP, and what are the limitations of this exemption?8.How can responsible persons affected by TFRP liability seek recourse or contribution from others who may also be liable?9.What strategies can a business employ to avoid incurring TFRP liability during periods of financial difficulty?10.How does the IRS's approach to audits and appeals in TFRP cases differ from that of other tax examinations, and why is this significant?11.What are the potential consequences for a responsible person if an employer files for bankruptcy while trust fund taxes remain unpaid?12.How does the concept of "willful blindness" apply to the TFRP, and in what ways can it affect a responsible person's liability?