Reasonable cause is usually defined as but not limited to: if the taxpayer exercised ordinary business care and prudence and was nevertheless unable to pay or file within the prescribed time.  Some examples of reasonable cause include:

1. Major family problems that you can prove, such as a divorce
2. Theft or destruction of your records and documents
3. A major illness to yourself or immediate family
4. Incarceration or a major disruption to your life
5. Bad advice from a tax expert
6. A natural disaster (hurricane, wind storm, fire, flooding, riot, etc.)
7. Lengthy time of unemployment
8. Death of a close family member

Keep in mind this is not a complete list but just a few reasons for reasonable cause.

Eliminating these penalties may lift a huge financial burden off of you since most of the time the penalties make up 25 – 30% of the total tax debt amount owed.

Even if your account is paid in full, the IRS will refund you the penalties and corresponding interest once your Penalty Abatement is approved.

Three of the most common penalties that are assessed to individual taxpayers by the IRS are Failure to File Penalty, Failure to Pay Penalty and Failure to Pre-Pay Tax Penalty.

• Failure to File Penalty is calculated based on the period from the due date of your tax return (including any valid extensions) to the date the return is filed by the taxpayer.
• Failure to Pay Penalty is calculated based on the amount of tax owed.  The penalty is calculated from the original payment date of April 15.  Many taxpayers are not aware that an IRS extension obtained by April 15 is only an extension to file; it does not give the taxpayer additional time to pay the tax liability.
• Failure to Pre-Pay Tax Penalty is assessed when proper estimated tax payments are not made throughout the year.  Estimated taxes are quarterly payments mailed to the IRS for taxpayers that are self-employed or any taxpayer who does not have sufficient withholdings taken from their income sources.

Another common penalty assessed by the IRS is the Failure to Deposit Penalty.  This penalty is assessed on business accounts when payroll deposits are made late.  If the payroll withholdings collected by the business are not sent to the IRS, then the individual(s) responsible are in danger of having the Trust Fund Recovery Penalty assessed.

There are literally hundreds of additional penalties for Individual taxpayers, Corporations, Partnerships, LLCs, Trusts and Non-Profits. Direct Tax Relief is an IRS tax debt relief company and can help determine your eligibility for IRS penalty abatement. If you owe more than $10,000 in back taxes, contact us for a free, no obligations tax resolution analysis

The post What is a Penalty Abatement? appeared first on Direct Tax Relief.

Payroll tax problems can be overwhelming for you, the business owner. That is why it is crucial to have a knowledgeable and dedicated Tax Attorney on your side that will fight for your rights. The tax experts at Direct Tax Relief will handle your payroll tax problems and negotiate with the IRS so you can concentrate on running your business.

As an employer, businesses are responsible for withholding several types of payroll taxes including federal income tax, Social Security tax, and Medicare tax. The business is also required by law to match the Social Security and Medicare portion of the taxes. Payroll taxes are commonly referred to as 941 taxes, named after the quarterly form that is prepared and filed with the IRS.

Recently, form 944 was introduced, but only businesses notified and granted by the IRS are allowed to file form 944, which is an annual payroll return. If these payroll taxes are not paid on time, the IRS can and will seize business assets such as business equipment, automobiles, bank accounts, and accounts receivables.

Contact Direct Tax Relief for a no-cost or obligation analysis. Direct Tax Relief is tax debt resolution company and can help solve your payroll tax problems.

The post Payroll Tax Problems (aka IRS Tax Form 941)? appeared first on Direct Tax Relief.

Call today at (800) 505-4134.

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 Trust Fund Recovery Penalty. 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 Trust Fund Recovery Penalty 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 Trust Fund Recovery Penalty to be assessed.

Who Can Be Responsible for the Trust Fund Recovery Penalty?

The Trust Fund Recovery Penalty 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.

Using available funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.

The Internal Revenue Service will request that any potentially responsible parties complete an interview in order to determine the full scope of their duties and responsibilities. A Revenue Officer prepares form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty.  Responsibility is based on whether an individual exercised independent judgment with respect to the financial affairs of the business.

Assessing the Trust Fund Recovery Penalty

If the Internal Revenue Service determines that you are a responsible person, they will provide you with a letter stating that they plan to assess the Trust Fund Recovery Penalty against you. You have 60 days (75 days if this letter is addressed to you outside the United States) from the date of this letter to appeal their proposal. If a protest against the assessment is not made and appealed to the Internal Revenue Service, they will assess the Trust Fund Recovery Penalty.

Once the assessment is made, aggressive collection actions will follow.  The Internal Revenue Service will take enforced collection action against your personal assets. They will file a federal tax lien or take levy or seizure action.  This includes garnishing your wages or levying your bank account.

Stop garnishments, levies, and seizures. Direct Tax Relief will review your payroll tax options with no obligation. Our tax attorneys and enrolled agents will work to provide payroll tax debt relief to your company and resolve the Trust Fund Recovery Penalty.

The post What is a Trust Fund Recovery Penalty? appeared first on Direct Tax Relief.