I was an officer in a C corp. got a penalty assessed for payroll as an individual. I am in Chapter 7 Bankruptcy (no asset). taxpayer advocate told me a few weeks ago that a portion could be discharged. Who does my BK lawyer call at IRS to do that?
The non-trust fund portion of the payroll tax liaiblty can be discharged in BK. The trust fund portion cannot be discharged. You cannot discharge the trust fund portion that has been assessed against you as a responsible party. You probably misunderstood what the IRS TP advocate informed you.
Phillip M. Smith Jr.
Los Angeles Tax & Business Attorney
Licensed before the United States Tax Court
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A TFRP (civil penalty for unpaid payroll) will almost always be assessed by your IRS Revenue Officer. Thus, you BK attorney should at least begin by contacting your RO. Keep in mind that the BK attorney will need to submit a signed Form 2848 (power of attorney) prior to discussing the matter. If your RO is unknown, I would contact IRS collections at 1-800-829-3903 and they will let you know. Again, a 2848 will be needed unless you call yourself.
There is also an insolvency department which will likely need to be called at 1-800-973-0424. They handle the bankruptcy issues for the IRS.
Mr Smith offer sound and very important advice. You will not be discharged for trust fund taxes and this amount could be quite substantial.
As far as who to call your prior paperwork should indicate the agent who handled this Section 6672 resposbile party action. For more on this topic readers should go to Personal Liability For Corporate Employment Taxes at the following link: http://www.sjfpc.com/personal_tax__liability_for_corrporate__employment_taxes_section_6672.html
Hope this helps.
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None of the trust fund recovery that was assessed against you can be discharged in bankruptcy.
The trust fund recovery penalty that was assessed against you represents only the portion of the taxes the corporation should have been collecting from the employees; the so-called nontrust fund portion - the taxes that are assessed against the employer not the employee - are not assessed against the owners, officers, directors or certain employees personally and so are never part of the trust fund recovery penalty.
The nontrust fund portion remains solely the debt of the corporation (unless, for some reason, the IRS can pierce the corporate veil) and should never have been an issue in your bankruptcy in the first place.
I'm afraid that there is a misunderstanding of some sort between you and the taxpayer advocate you spoke with. You should discuss the matter in more detail with your bankruptcy attorney.
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Your BK lawyer should know how to discharge taxes as there are requirements in the bankruptcy code, and special rules for discharging tax liabilities.
Ask your BK lawyer for the details.
Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.
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