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

 

 

Special Counselor of the Month

OWEN KOFF 

Electing a counselor of the Quarter is often a difficult task for the CTT (Counselor Training Team). So many of our members do such outstanding work, with clients, colleges, organizations, Chambers, truly we are blessed with the outstanding staff we have. And of all the members perhaps no one works harder, takes on more additional duties and responsibilities than does our Counselor of the 1^st Quarter of 2018, Owen Koff.

You may know Owen as an outstanding client-devoted fellow member, but are you aware Owen is a member of the Executive Committee, a member of the CTT, a special ambassador to the JM Executive Program for Entrepreneurs, a representative to the Delray Chamber of Commerce, both as a speaker and a Mentor, a developer of a Boot Camp on the Art of Selling, a representative to St. John Paul’s, an ambassador to the West Boca Chamber of Commerce, all  among his many “jobs”. Additionally  Owen has designed and written his own material for his Seminars, and will be delivering an all-day Seminar on Selling as part of our upcoming Business Certificate Academy.

As the Chapter Editor, I can tell you that when it comes to “volunteering”, Owen is at the head of the line. And yes, Owen has won this award before, but he simply never says “no”, and always wants to help the Chapter in any way he can. All of that begins to describe this very special guy, and so we join in saluting him for everything he does that makes our Chapter shine.

Take a bow, friend, you are so worthy of the award and you ARE our Special Counselor of the Quarter for January, February, and March.

 

Martin Kahn, SCORE Counselor

Vist is at: www.scoresouthflorida.net

 

 

Entertainment & Meal Expense Tax Rules

 

The following tax law rules pertain to entertainment and meal expenses.

1-The expense must be directly related to and or associated with the active conduct of the taxpayer's trade or business.

2-Generally, the deductible portion is 50% of the amount deemed not lavish or extravagant. Meal expenses incurred in the course of travel away from home fall in this category. (NOTE: Some limited exceptions to the 50% limit apply and the full 100% is deductible)

3-The total expense also includes any admission fees, parking fees, tips, and taxes paid.

4-Club dues such as airline, country, hotel, luncheon, social, and sporting clubs are NOT deductible in and of themselves.

5-The deductible portion of business gifts is limited to $25 per recipient per year and is treated separately from entertainment and meal expenses.

The taxpayer should keep documentation and substantiation with the following information:

            Date

            Description

            Total Amount

            Business Discussed

            Business Relationship of those entertained

            Identification of individuals who attended the event, their reason for attending, their titles, etc.

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

 

Terrible Customer Service

A family mail ordered a lamp shade to replace one of their own that had aged. Prior to placing an order the supplier asked them to send via email a scanned photo of their existing shade to confirm they had a replacement. The family did so. When the replacement shade arrived it was the correct version, however, it was discolored and damaged probably from years on a shelf.

The family called the supplier who pushed back, refusing to take the unit in return. The family escalated to management of the organization who agreed to accept the unit and pay the cost of return shipping. The return shipping costs where high because the supply organization refused to allow use of their bulk shipping rates. The family notified their credit card company to dispute the charges, and made a point with management about abuse from the underlings in the organization. Someone probably lost a job as a result.

How to you train your employees?

 

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net