Payroll Taxes and the Trust Fund Recovery Penalty (TFRP)

To encourage prompt payment of payroll employment taxes, Congress passed a law that provides for the TFRP. These taxes are called trust fund taxes because you actually hold the employee's money in trust until you make a federal tax deposit payment in that amount. The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. And, the business does not have to have stopped operating in order for the TFRP to be assessed.

Who Can Be Responsible for the TFRP?

The TFRP can be assessed against any person who:

1-Is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and

2-Willfully fails to collect or pay them.

A responsible person may be:

·An officer or employee of  a corporation

·A member or employee of a partnership

·A corporate director or shareholder

·A member of a board of trustees for a nonprofit organization

·Another person with authority and control over funds to direct their disbursement

·Another corporation or third party

·Payroll service providers or responsible parties within these organizations

 

For willfulness to exist, the responsible person:

·Must have been, or should have been, aware of the outstanding taxes and

·Either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required)

The Penalty and Enforcement

The amount of the penalty is equal to the unpaid balance of the trust fund tax.

Once the IRS asserts the penalty, they can take collection action your personal assets by fiing a federal tax lien or take levy or seizure action.

Avoiding the TFRP

You can avoid the TFRP by making sure that all employment taxes are collected, accounted for, and paid to the IRS when required. Make your tax deposits and payments in full and on time.

 

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

 

 

 

Florida Small Business Index Report

 

Near the end of 2017 The Florida Chamber of Commerce reported its

Quarterly Small Business Index statewide survey showing small businesses are most concerned about:

 

Workforce quality (18 percent),

Government regulations (17 percent),

Economic uncertainty (12 percent),

Healthcare costs (10 percent),

Lawsuit abuse (8 percent),

Access to capital (6 percent).

 

The Chamber reported: Of Florida small businesses, 48 percent of respondents expect to hire in the next six months.

 

How does your business compare?

 

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

 

Canceling an EIN "Employer Identrification Number"

 

If, for some reason, you have an old EIN with the IRS, the IRS can close your business account.

The IRS cannot cancel your EIN. Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. The EIN still belongs to the business entity and can be used at a later date, should the need arise.

If you receive an EIN but later determine you do not need the number (the new business never started up, for example), the IRS can close your business account.

To close your business account, send the IRS a letter that includes the complete legal name of the business entity, the EIN, the business address and the reason you wish to close your business account.

If you have a copy of the EIN Assignment Notice that was provided by the IRS when your EIN was assigned, include that with your letter.

Send the information to:

Internal Revenue Service

Cincinnati, Ohio 45999

To prevent potential tax issues down the road, it is a good idea to take the above steps to close your business account with the IRS.

 

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

 

Marketing Tip of the Month

#9 THINGS THAT GO BUMP IN THE NIGHT

Want your mail opened? Include something that makes a “bump” in the envelope. It could be as simple as a wrapped mint, a product sample, whatever.  I guarantee it will be opened, because we’re all curious, aren’t we, just like the  proverbial cat! And to be doubly sure? Use a bunch of stamps instead of one!

 

Martin Kahn, SCORE Counselor

Visit us at: www.scoresouthflorida.net