Hi, I’m Jeff Fouts, a tax attorney located in metro Atlanta, with a nationwide law practice helping clients who have serious IRS problems. I’d like to share with you another client case study from the 1,000’s of tax clients we’ve represented.
Client age: 50’s
Total tax debt: $200,000 in payroll tax to the IRS.
Details of the case: Business not paying its payroll tax in the past, and the IRS attempting to make an officer of the company a “responsible party”.
A man in his 50’s from near Columbus, Georgia called our office for assistance in preventing the IRS from filing a tax lien against him personally. His company owes the IRS unpaid payroll taxes and an IRS Revenue Officer contacted him in an attempt to collect the taxes.
Our first step was to obtain signed IRS Form 2848 and Form 8821 power of attorney documents from our client. These documents allow employees of the Internal Revenue Service to speak with us and give us information we request from them.
We requested that the IRS send us their Account Transcripts, and after we had received them and reviewed them, they revealed that our client did not owe any personal taxes but his business owed more than $200,000 in unpaid payroll taxes for various periods over the last two years. The IRS had filed tax liens and have the legal right to levy or garnish to collect on some, but not all, of this tax debt.
Our client met with the assigned IRS Revenue Officer and gave him preliminary financial information on the business. Apparently the Revenue Officer scheduled what is called a responsible party interview with our client to identify the people within the business who were a “responsible party”, meaning they were responsible for not making sure the payroll taxes had been paid. However, the Revenue Officer failed to appear for the scheduled interview and has not returned any phone calls to our client asking for an explanation.
The IRS must conduct an interview with any person it thinks may be a “responsible party”. The IRS conducts this interview before they assess any trust fund tax penalties for the taxes withheld from an employee’s paycheck for federal income, social security and medicare taxes against an individual. After conducting this interview, the IRS may request additional information such as copies of bank signature cards and a list of corporate officers. Once the IRS has determined who is a responsible party, the IRS will issue a proposed assessment giving the taxpayer 60 days to file a written protest to the proposed assessment. Until this response period expires, the IRS cannot assess the trust fund tax penalties against an individual taxpayer. Because there is not yet an assessment of the tax, and therefore there isn’t yet a tax debt owed by that individual, the IRS cannot take any collection actions such as levying or garnishing or filing a tax lien against that person.
Our client has not yet been interviewed to determine if he is a responsible party for his company’s unpaid payroll taxes. Therefore, the IRS has not assessed any taxes against him personally and therefore they can’t begin any collection against him, including the filing of a tax lien at this time.
We are concerned about the lack of response from the Revenue Officer as this is highly unusual unless the Revenue Officer is out on medical or family leave. We continue to try to reach the Revenue Officer to determine how to move this case forward. He has not returned our phone calls either. In the meantime, we are monitoring the business to be sure all payroll taxes are being paid promptly and in full by the due date. We have also recommended that the business begin making voluntary payments whenever the funds are available and to designate these voluntary payments to the trust fund portion of the tax debt. This tactic will lower the amount of unpaid trust fund taxes that can be assessed against our client in the future.
Moral of this story? It is bad enough when the IRS contacts you, but it is dangerous if they stop returning your phone calls. While a sudden disappearance may be caused by unexpected circumstances for the Revenue Officer, it is a highly unusual situation that should be monitored by a tax professional.
I hope this important client case study has helped you understand the IRS a little better and how tax problems are solved. Chances are you have questions or concerns about your own particular tax problem. I encourage you to pick up the phone and call me. I can answer your questions. Over the past 20 years I’ve represented clients in all 50 states and 29 foreign countries, and I welcome your call. You can reach me at 1-888-995-6785 or by email at firstname.lastname@example.org. I’m Jeff Fouts and thanks so much for watching. Have a wonderful day.
TaxHelpAttorney.com Tax Law video No. 143608