Zaher Fallahi, Attorney At Law and Certified Public Accountant (CPA), is a Law and CPA firm with emphasis on US tax, tax controversy, un-disclosed offshore accounts, international tax, foreign gifts, out-side general counsel services, and Office of Foreign Assets Control (OFAC) Regulations. We are licensed in California and Washington D. C., and represent tax and OFAC clients throughout the United States and overseas. Depending on the case, telephone appointments are available for long-distance clients.
Harvard Law School
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To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP.
These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount.
The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. The business does not have to have stopped operating in order for the TFRP to be assessed.
Who Can Be Responsible for the TFRP?
The TFRP may be assessed against any person who:
- is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and
- Willfully fails to collect or pay them.
A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be:
- an officer or an employee of a corporation,
- a member or employee of a partnership,
- a corporate director or shareholder,
- a member of a board of trustees of a nonprofit organization,
- another person with authority and control over funds to direct their disbursement, or
- another corporation or third party payer.
For willfulness to exist, the responsible person:
- must have been, or should have been, aware of the outstanding taxes and
- either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required).
Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.
You may be asked to complete an interview in order to determine the full scope of your duties and responsibilities.
Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.
An employee is not a responsible person if the employee’s function was solely to pay the bills as directed by a superior, rather than to determine which creditors would or would not be paid. Notice 784, Could You Be Personally Liable for Certain Unpaid Federal Taxes? contains additional information regarding the TFRP.
Tax Planning Tip. New 20% tax deduction. There is a new 2018 deduction of 20% for pass-throughs; New 20% Deduction
How Can We Help
Zaher Fallahi, Tax Attorney & CPA, is an IRS Tax Problems solver in Los Angeles & Orange County. He assists clients in their IRS Debt and the California Employment Development Department (EDD) problems with respect to employment tax (Trust Fund Recovery Penalty).
- Zaher Fallahi has been rated 10 out of 10 by Avvo Rated 10 of 10 .
- Zaher Fallahi was named a top tax attorney in September 2015. You can find our name here: TOP Tax Attorney
- About 1.8% of the US lawyers are also CPAs, and we are proudly one of them.
Let us help. Contact Now:
- (310) 719-1040 (Los Angeles)
- (714) 546-4272 (Orange County)
- e-mail [email protected]