If your business has a 941 employment tax debt (employment taxes) the IRS will likely conduct the 4180 Interview with individuals within the business. The article and video below have been prepared by a Denver tax attorney at The McGuire Law Firm to provide additional information regarding the 4180 Interview. You can speak with a tax attorney in Denver by contacting The McGuire Law Firm at anytime.
The 4180 Interview is an interview conducted by the Internal Revenue Service when a business owes 941 taxes (employment taxes). A portion of the 941 debt called the trust fund portion can be personally assessed to one or more individuals within the business when employment taxes are owed to the IRS. The IRS can assess the willful and responsible parties, and thus the interview is used to determine who the willful and responsible parties are, and based off of such interview, the IRS will propose the personal assessment of the trust fund recovery penalty.
In terms of responsibility the IRS looks at who was responsible for the financial affairs of the business and had the authority to withhold taxes and direct payment of 941 taxes and other bills. Generally, the owners of the business will be considered responsible. In terms of being willful, the IRS looks at who knew the taxes were not being paid and continued to allow the taxes to not be paid. The IRS can propose the assessment of the trust fund recovery penalty against one or multiple individuals and once assessed, the debt is joint and several liability meaning the IRS can collect the entire amount of the penalty from one of the parties if such individual has the financial means to satisfy the debt. Furthermore, the IRS can and will attempt to collect the penalty from the assessed individuals even if or when the business is making payments on the 941 employment tax debt. Thus, you may have a case whereby the business and multiple individuals are paying towards the same tax debt.
A taxpayer does have the right to protest the proposed assessment of the trust fund recovery penalty by filing a protest within 60 days from the date the proposed assessment was issued. The taxpayer will be afforded an appeals hearing with an IRS appeals officer. Furthermore, if a taxpayer has been assessed the penalty, but does not feel they should be held responsible, the taxpayer can request that the penalty be abated in somewhat of a similar fashion to requesting the abatement of other tax penalties. The taxpayer will complete Form 843 for each period they have been assessed the tax and submit the abatement request to the appropriate IRS office.
If your business owes 941 taxes or you have been assessed the trust fund recovery penalty, speak with a Denver tax attorney at The McGuire Law Firm about your resolution options. A free consultation is offered to all potential clients.