Employment Taxes and the Trust Fund Recovery Penalty: What You Need to Know — Part III

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You’ve been accused of willfully failing to pay employment taxes and are now at risk of being assessed the trust fund recovery penalty. What next?

How you respond — and when — could determine whether you’re forced to endure a lengthy interview or appeals process, and more importantly, whether you end up paying the penalty. Below, we offer suggestions to help you escape the worst of the TFRP ordeal.

What is the TFRP’s statute of limitations?

If you receive a warning letter about the TFRP, be sure to check the dates of the allegedly unpaid taxes. You might get out of dealing with the IRS simply by virtue of a statute of limitations mentioned in the Internal Revenue Code. This occurs three years after the filing date.

Can the TFRP be appealed?

If the statute of limitations doesn’t apply to your case and, after an IRS investigation, you’ve been deemed responsible and willful in your failure to withhold or pay employment taxes, the next step is an appeal. If successful, this could result in a new settlement or the removal of the penalty altogether. 

How can I request a TFRP appeal?

TFRP appeal requests must be submitted within sixty days of receiving the original warning letter from the IRS. This request should feature a formal written document supported by evidence of your lack of responsibility or willfulness.

If your request is accepted, a time and date will be set for the hearing. Additionally, you may receive a letter with the preliminary findings from the appeals office.

What happens during and after the TFRP appeal hearing?

Evidence can once again be presented at the appeal hearing. If this proves convincing, you may receive a letter of determination that involves the acceptance of your proposed settlement.

Your chances of successfully staging a TFRP appeal are far greater with an enrolled agent on your side. Contact the Highland Tax Group today to learn about your options for relief.