The IRS issued a legal memorandum where it concluded it would credit responsible persons for trust fund payments made by the employer on August 19. The issue arose when the Service found that two individuals were responsible for the trust fund portion of a corporation's unpaid employment taxes. The corporation paid off the principle owed, but not the accrued interest on the debt. The corporation went on to make a voluntary payment on the remaining liability. The corporation requested that the payment be applied to the trust fund portion of the liability even though it had not yet paid off the non-trust fund portion of its liability.
Section 6672 imposes liability on those who are responsible for collecting Social Security tax and fail to do so. While IRS policy is to collect the liability only once, in reality each responsible person is responsible for the entire liability.
The IRS considered whether to credit the responsible persons for trust fund payments made by the employers and decided in the affirmative. The Service stated that the decision was made after concluding that it would be unlikely for the courts to allow the IRS to collect a trust fund recovery penalty more than once.
Posted by Shannon Morris, Associate Editor, Wealth Strategies Journal
Section 6672 imposes liability on those who are responsible for collecting Social Security tax and fail to do so. While IRS policy is to collect the liability only once, in reality each responsible person is responsible for the entire liability.
The IRS considered whether to credit the responsible persons for trust fund payments made by the employers and decided in the affirmative. The Service stated that the decision was made after concluding that it would be unlikely for the courts to allow the IRS to collect a trust fund recovery penalty more than once.
Posted by Shannon Morris, Associate Editor, Wealth Strategies Journal
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