Department at IRS to call regarding discharge of penalties, interest and employer portion of civil penalty in payroll tax

Asked about 2 years ago - Los Angeles, CA

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?

Attorney answers (5)

  1. Phillip Monroe Smith

    Contributor Level 18

    4

    Lawyers agree

    Answered . 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.

    Good luck!
    Phillip M. Smith Jr.
    Los Angeles Tax & Business Attorney
    Licensed before the United States Tax Court
    Call: 323-292-4116

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can... more
  2. Paul Yaroslav Tarnavsky

    Contributor Level 9

    4

    Lawyers agree

    Answered . 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.

  3. Steven J. Fromm

    Contributor Level 20

    4

    Lawyers agree

    Answered . 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_fo...

    Hope this helps.

    Please remember to designate a best answer to your question.

    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 for more tax, estate and business articles is www.sjfpc.com. and his blog is

    LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia... more
  4. Dana Whitney Atchley

    Contributor Level 16

    3

    Lawyers agree

    Answered . 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.

  5. Curtis Lamar Harrington Jr

    Contributor Level 20

    1

    Lawyer agrees

    Answered . 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... more

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