Payroll Tax Debt and the Time Limit for Personal Assessment

If you’re a business owner and your business owes the IRS back payroll taxes, chances are you’ll be getting a personal tax debt and personal tax lien because of it. The IRS has the ability to assess the Trust Fund portion of the business payroll tax debt to the Responsible Individual(s) operating the business.

However, there’s a catch. The IRS only has three years from the date the taxes were deemed to be assessed to the business, to turn around and assess the Trust Fund Recovery Penalty to the Responsible Individual(s). This is called the Assessment Statute Expiration Date (ASED). So, if you are dealing with the IRS on a business payroll tax liability, be aware that the Service may not have the right to collect it from you too. Be sure to pay close attention to this rule if a payroll tax debt from a closed business has resurfaced.

Contact M&M Financial if you have more questions about the ASED and how it may affect your IRS collection case.