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Avoiding trust fund penalty assessment.

Ingleside, IL |
Filed under: Tax law

The owners of a company I was once involved with avoided the assessment of trust fund penalty because they had loaned the company money on several occasions to meet payroll. The accounting firm was Grant Thornton, in the Chicago area. Delinquent withholding etc. totaled about $80,000. I think the owners would have been liable for about $30,000. I am certain they were absolved of responsibility. What I want to know is whether that kind of exemption still exists.

Attorney Answers 1

Posted

There is no exemption based upon lending money to meet payroll. The tests is whether the parties were "responsible persons" under Section 6672 of the Internal Revenue Code and relaevant case law. Basically, if the party could make the decision as to having creditors paid instead of the IRS, then that party is a responsible party. Additionally, these cases are highly factual determinations and can swing on the smallest details.

Hope this helps. Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net . For further tax advice visit his website at www.sjfpc.com . and blog at >

LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

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