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

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

Posted

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 only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is philsmithjr@worldclasslawyers.com.

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Posted

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.

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Posted

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.

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 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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Posted

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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Posted

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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