If your business owes 941 employment taxes and these taxes are not paid, it is likely an Internal Revenue Service revenue officer will be assigned and conduct the 4180 Interview. If you have been requested to take the 4180 Interview, this is a very serious tax matter, and as a tax attorney, I would highly recommend you contact a tax attorney or tax professional to discuss your circumstances, options and the possible consequences of owing 941 employment taxes. The article below has been drafted by a Denver tax attorney at The McGuire Law Firm to discuss the 4180 Interview.
The 4180 interview is conducted by the Internal Revenue Service when 941 employment taxes are owed to the IRS. The interview is used so the IRS revenue officer can make an initial determination regarding who the willful and responsible parties are regarding the failure to pay the 941 employment taxes. Those individuals that the revenue officer deems willful and responsible will receive a notice stating that the IRS is proposing to assess the trust fund portion of the 941 taxes. The trust fund portion of the 941 taxes is the amount of social security and Medicare tax and federal withholding tax that was withheld from employee’s paychecks. Thus, individuals can be personally responsible for a large portion of a 941 tax debt, and the IRS can collect from each individual that is deemed liable, even as the IRS is collecting the tax debt from the corporation, partnership or business that also owes the taxes.
The interview asks questions that help determine who had knowledge the taxes were due and not being paid (willful) and who had the authority within the business to have the taxes paid. Thus the interview will ask how and when each individual became aware that 941 taxes were due and not being paid, and what actions such individual took. Further, the interview will ask questions such as who prepared, signed and filed returns, who reviewed the financials of the business, who made internal business decisions etc. The IRS revenue officer may interview one person or can interview multiple people. After conducting the 4180 Interview(s) the IRS revenue officer will make the proposed assessments of the Trust Fund Recovery Penalty to the individuals they feel are willful and responsible. If the revenue officer does not feel an individual is willful and responsible, no notice or proposed assessment will be filed for such individual.
Once the revenue officer has proposed the assessment of the trust fund recovery penalty, the individual has 60 days to protest the assessment. A hearing will be held with an appeals officer whereby the individual can appeal the assessment and provide information as to why the individual is not willful and responsible and therefore should not personally responsible for the trust fund amount. If multiple individuals are found responsible for the trust fund, the tax debt is joint and several liability meaning that each individual is potential responsible for the whole amount. Yes, the IRS can collect the entire trust fund amount from one individual even if multiple individuals are responsible for the trust amount.
Given the severity of 941 tax debts and personal exposure, such a tax debt should be discussed with a tax professional such a tax attorney or CPA. A Denver tax attorney at The McGuire Law Firm can assist you with tax matters including 941 tax debts, 4180 Interviews and other business tax matters.
Contact The McGuire Law Firm and speak with a Denver tax attorney to discuss your tax question and issues through our free consultation! Offices in Denver and Golden Colorado.