Owners, Officers, and certain employees can be held personally liable for a business’s failure to pay certain payroll taxes. This means that if you, or someone else within your business, are found to be willful and responsible for the business’s failure to pay payroll taxes you could be held personally liable for a portion of the tax called the Trust Fund Recovery Penalty. Once the IRS has made a personal Trust Fund Recovery Penalty assessment against you, they may begin to collect from you individually in addition to its collection efforts aimed at the underlying business entity. Thus, your individual assets, wages, and bank accounts are placed in jeopardy.
Tax Penalties
The taxing authorities penalize millions of taxpayers each year. They have so many tax penalties that it’s hard to understand which penalty they are hitting you with. The most common penalties are: Failure to Deposit; Failure to File; Failure to Pay. All of these penalties can substantially increase the amount you owe the IRS or State in a very short period of time. To make matters worse they charge you interest on penalties. Many taxpayers often find out about tax problems many years after they have occurred. This causes the amount owed to be substantially greater due to penalties and interest. Some IRS penalties can be as high as 75%-100% of the original taxes owed. Often taxpayers can afford to pay the taxes owed; however the extra penalties make it impossible to pay off the entire balance. The original goal of IRS imposing penalties was to punish taxpayers to keep them in line. Unfortunately they have turned into additional sources of income for the IRS. Penalties can be abated. The IRS and the State have broad powers when it comes to Seizure of Assets. These powers allow them to seize personal and business assets to pay off outstanding tax liabilities. This occurs when you have been avoiding them. The taxing authorities attempt to collect amounts owed with a seizure as the ultimate act of their collection efforts.