Payroll Tax, the Trust Fund and My Personal Tax Refund

If you’re a business owner that owes payroll tax, the assessment of the Trust Fund portion of the employment tax debt can be financially disastrous. The Trust Fund may be assessed to the individual owners and Responsible Individuals of the business. And, the IRS has the authority to simultaneously collect the Trust Fund from the individual(s) and the business.

Although the IRS has been taking a harder stance against it, M&M aims to link our business client’s formal Installment Agreement to the business owner’s personal Trust Fund assessment. This allows the business to pay its own debt and keeps the IRS from collecting a monthly payment from the Responsible Individual(s).

This strategy can work, but it won’t protect an individual taxpayers’ income tax refund. When you have the Trust Fund assessed to you personally, the Service will take your income tax refund whether the assessment is linked to the business IA or not. If you are a business owner in this situation and you don’t want to give up your income tax refund, talk with your tax return preparer to adjust your withholding and 1040 Estimated tax payments accordingly. This can help minimize the refund amount that the IRS can seize, which in turn keeps more money in your pocket.

M&M Financial specializes in the resolution of business and individual tax debts resulting from unpaid 941 payroll tax. Contact an M&M Tax Advisor if you think you may need expert representation, or if you just want to know your options and keep us in your back pocket.