RONALD J. CAPPUCCIO, JD, LLM (TAX)


TAX, BUSINESS AND ESTATE ATTORNEY

QUESTIONS
856.665.2121

The IRS Attacks Employers Who Cannot Pay 941 Employment Taxes

Rule: The IRS shuts down businesses that cannot pay employment taxes.

All the IRS wants is money!

The Internal Revenue Service does not care if closing down your business will throw your employees out if work. This argument will get you nowhere fast! In fact, by shutting-down your business the Revenue Officer gets credit for being an aggressive employee of the IRS.

The government's purpose of employer withholding is to force money from the employer so most people do not see how much is really being taken from them in taxes. They do not care about a higher purpose of producing more or keeping the economy going!

  • First , the IRS will send notices. These notices are computer-generated form letters so they do not seem as important as they are to your business. The notices may be a simple "request" for filing or payment for a quarter or more of taxes.
  • This will be followed by calls and ultimately by unannounced visits by Revenue Officers (collection agents for the IRS.)
  • If you don't have your tax attorney immediately deal with the issue, the IRS will Levy your business bank account. They will take everything in your account even if it means your checks bounce and you cannot pay employees, taxes and creditors! The IRS will harass your customers and levy on any monies they owe your business. This usually scares away customers.
  • Also, the IRS will file a Notice of Federal Tax Lien which will ruin your credit. Many banks will close a business credit line when a lien is filed. If there is not enough money to pay the 941 taxes, the IRS will shut down your business.

If your business cannot make payroll taxes, the IRS assesses the 100% Penalty (now euphemistically called the Trust Fund penalty) against the owners and officers. In addition to attacking the owners and officers, the IRS will assess check-signers and other so-called Responsible Persons even if they are not owners nor executives of the business! The government has further stacked the deck in their favor by prohibiting indiviuals from discharging in Bankruptcy trust fund withholding taxes.

If your business has past due 941 tax returns, or owes 941 taxes, DO NOT WAIT FOR THE IRS TO LEVY YOUR BANK ACCOUNTS!