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.

The trust fund portion of the 941 tax debt is the employee’s portion of the social security and Medicare tax and the employee’s federal withholding tax.  Thus, if you looked at a 941 tax return, and no tax payments had been made, you could multiply the social security and Medicare tax by 50% and add this amount to the total federal income tax withheld and this would be the trust fund amount for the applicable quarter.  This is the amount that individuals can be held responsible for.

When a 941 tax debt is due, a revenue officer from the IRS will conduct an interview known as the 4180 Interview to determine the willful and responsible parties.  The willful and responsible parties will receive a proposed assessment of the Trust Fund Recovery Penalty.  You have 60 days from the date of the proposed assessment to protest the assessment, and if the assessment is not protested, the individual will then have a tax debt under their social security number.  Thus, the IRS could file a tax lien that would attach to your personal assets, and can collect the trust fund from the individual even if the business is making payments towards the tax debt.  Therefore, a 941 tax liability is a very serious matter, and I would recommend that any business with a 941 tax debt that cannot be immediately paid, speak with a tax attorney.  You can speak with a Denver tax attorney at The McGuire Law Firm through a free consultation!

The video below has been prepared by a tax lawyer at The McGuire Law Firm to provide additional information regarding the IRS Trust Fund Recovery Penalty.

Contact The McGuire Law Firm to schedule your free consultation with a Denver tax attorney!  The McGuire Law Firm has offices in Denver, Colorado and Golden, Colorado.  Call today!

The trust fund recovery penalty is the personal assessment of the  trust fund portion of unpaid 941 taxes to the willful and responsible parties.  As you may recall, the trust fund portion is the employee social security and Medicare portion and employee’s federal withholding tax.  When this amount is not paid over to the US Department of Treasury, it can be personally assessed to individuals.  Thus, the procedure begins when a business owes 941 taxes.  When a revenue officer is assigned to resolve a business tax debt that has 941 liabilities, the revenue officer will begin investigating who could be potentially responsible for the trust fund taxes whether you know it or not.  The revenue officer will gather information from the business that they will later use in their investigation, and compile a list of individuals to conduct the 4180 Interview with.

The 4180 Interview is an interview conducted by the revenue officer with different individuals that the revenue officer feels could be responsible for the trust fund tax, or who could shed light on individuals that may be responsible.  The interview asks questions regarding who is in charge of paying bills and operating the business and who had knowledge that the 941 taxes of the business were not being paid.  Thus, the revenue officer is looking at who the willful and responsible parties are.  After the revenue officer has complete the interviews they will either issue a proposed personal assessment of the trust fund recovery penalty to an individual or they will not.  The revenue officer can propose assessment of the trust fund to one or multiple persons, and the trust fund liability is considered a joint and several liability meaning that the IRS can actively collect the entire amount of the trust fund from one individual.  Moreover, the trust fund liability is a non-dischargeable debt even in bankruptcy.

Once the revenue officer makes the proposed assessment of the trust fund each individual has 60 days from the date of the proposed assessment to protest the assessment.  When an individual proposes assessment of the trust fund recovery penalty, they will eventually have a hearing with an IRS appeals officer and have the ability to show why they are not a willful and responsible party and therefore should not be assessed the debt.

If the individual does not protest the assessment within the 60 day time period, the debt will be assessed and the individual will begin receiving IRS collection notices regarding the debt.  If the individual does not formalize an agreement to resolve the trust fund liability, the IRS can levy bank accounts, garnish wages and potentially seize assets to collect on the trust fund liability.

As a Denver tax attorney, John McGuire has represented many businesses that owe the IRS 941 taxes in addition to their owners who are personally liable for the trust fund portion.  If your business has a 941 tax debt or you have been personally assessed the trust fund recovery penalty, we highly recommend you consult a tax attorney if you have not resolved the issue.

You can speak with a Denver tax attorney by calling 720-833-7705 and schedule a free consultation to discuss your tax issues.

[