• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Need help with Federal Income Tax Notice

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

ugzruben

Junior Member
What is the name of your state (only U.S. law)? Georgia

I am an employer in Georgia. In 2007, cash flow was very tight and I was not able to pay the Fed. Income Tax for 6 pay periods (weeks). Now I have the money and I wanted to do the right thing but I found out they have tacked on $15,000 worth of penalties and interest.

Is there someone I can talk to to see if they can reduce the penalties and interest?

I have gone to the office and had no luck. I have heard of an "offer in compromise". Is that the only way?
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? Georgia

I am an employer in Georgia. In 2007, cash flow was very tight and I was not able to pay the Fed. Income Tax for 6 pay periods (weeks). Now I have the money and I wanted to do the right thing but I found out they have tacked on $15,000 worth of penalties and interest.

Is there someone I can talk to to see if they can reduce the penalties and interest?

I have gone to the office and had no luck. I have heard of an "offer in compromise". Is that the only way?
This is too late to help you, but it would have been far better for you to have simply run six weeks late, even for two years, than to have not paid at all.

You also need to understand that payroll, and payroll taxes come first, before anything else.

You are not going to get an offer incompromise for trust fund taxes (and payroll taxes are trust fund taxes, its money that belonged to your employees that was supposed to be sent to the IRS on their behalf).

You are going to have to pay the taxes, and the interest and penalties. You are not going to be able to get around that. Pay the taxes now, and keep sending as much as you can towards the interest and penalties, as soon as you can send it.
 

davew128

Senior Member
Payroll taxes are trust fund taxes and someone cannot "settle' something like that.
Going to disagree with you here. I have in fact gotten an OIC accepted in the past on assessed trust fund penalties. Of course the facts and financials to warrant that acceptance were in the taxpayer's favor and aren't anywhere near the norm.
 
Last edited by a moderator:

LdiJ

Senior Member
Going to disagree with you here. I have in fact gotten an OIC accepted in the past on assessed trust fund penalties. Of course the facts and financials to warrant that acceptance were in the taxpayer's favor and aren't anywhere near the norm.
Well, I am glad that you were able to do it. Was it on the taxes or just the penalties?
 

davew128

Senior Member
Well, I am glad that you were able to do it. Was it on the taxes or just the penalties?
The trust fund penalty....which is the tax in every sense of the word. The total debt including interest was corporate, and of course the corporation was long gone. What helped was because it was a trust fund penalty, it was spouse specific rather than an income tax which is a joint and several liability. The spouse hit with the penalty had minimal income and the family home had been inherited by the other spouse 15 years earlier so his name wasn't on the deed. It also helped that there was an NOL they agreed not to use for five years and of course you can assign a dollar value to that.
 

LdiJ

Senior Member
The trust fund penalty....which is the tax in every sense of the word. The total debt including interest was corporate, and of course the corporation was long gone. What helped was because it was a trust fund penalty, it was spouse specific rather than an income tax which is a joint and several liability. The spouse hit with the penalty had minimal income and the family home had been inherited by the other spouse 15 years earlier so his name wasn't on the deed. It also helped that there was an NOL they agreed not to use for five years and of course you can assign a dollar value to that.
I have a client with a very similar situation who is getting nowhere with the IRS. It was also corporate. He was the guy who supervised the work in the field, and the other shareholder ran the office. He had no idea that the payroll taxes weren't being remitted. He is now unemployed and too old to be easily employable in his trade. His wife works and makes a fairly low salary. They have a house that they are upside down on, they are driving 10 year old cars and they literally have nothing else. The IRS wants 150k.

There probably would be an NOL, but the other shareholder absconded (completely disappeared) with the books.

They have been reluctant to consult a tax attorney because they have nothing and can barely make it on the wife's salary. You have given me a little more hope for their situation.
 

davew128

Senior Member
Assuming you don't feel you can win in court fighting the trust fund penalty assessment (which of course you need to pay a portion of first and then sue...requiring an attorney), then an OIC in this case would be your best bet.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top