Officer, Director & Shareholder Liability for Payroll Taxes

Get Help from a San Diego Business Tax Attorney

If a company fails to collect and pay employment taxes, the owners and executives (i.e. CEO and Treasure) who are responsible for paying and withholding wages and employment taxes may be personally liable for a portion of the uncollected taxes. Delinquent taxes can result in IRS collection activity against a company and its officers, directors and owners. In some cases, it may force small businesses struggling financially to close when the IRS seizes their bank accounts. If you are currently facing a serious tax problem, speak with our firm's skilled San Diego business tax attorneys to understand your legal rights and discover your options to resolve your tax matter.

A Closer Look at the Trust Fund Recovery Penalty

When it comes to the Trust Fund Recovery Penalty, both IRS and State of California must provide notice to a “responsible person” who the government identifies as potentially being liable for payroll taxes. The individual is given time to protest the assessment. Specifically, the IRS normally starts by interviewing company employees and then sending letters proposing an assessment on individuals who had tax-paying authority within the company. Recipients of this letter have 60 days to respond. A failure to respond will result in a final tax balance being assessed against the individual and future IRS action to collect on the balance owed.

The Trust Fund Recovery Penalty can be avoided:

  • Officers, directors, and shareholders should stay informed about the company's financial status, including reviewing accounts payable reports and notices received from the IRS (income taxes and payroll taxes), EDD (state payroll taxes), and BOE (state sales taxes).
  • Hiring a payroll company to process your payroll returns and pay payroll taxes allows your payroll reports and payments to be made on time.
  • Keep in mind that delinquent payroll returns and payments can subject your company to several significant penalties – failure to file, failure to deposit, and failure to pay.

How can our team of skilled San Diego tax attorneys help your company?

If your company owes payroll taxes, contact our office immediately to discuss your legal rights to protect your assets before it is too late. At Milikowsky Tax Law, we aggressively challenge the IRS' proposed assessments where the facts simply do not support IRS' position. In cases where the individual was solely responsible for managing the company's day-to-day business operations, there are several options available to resolve the expected tax liability.

Our team of highly skilled San Diego business tax lawyers will thoroughly review the details of your case and your business records to help resolve your tax matter, but also identify the root cause of the problem. Our firm's founding tax attorney has over 13 years of legal experience and years of experience as a business owner/operator, board member, and key decision make him indispensable to your business.

Resolve your tax matter with the confident you have selected qualified tax lawyers.

For more information on how we can help your business defend itself against a IRS or State of California tax matter, please contact us today.

Milikowsky Tax Law—Keeping Your Business in Business.


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