How IRS Proves Trust Fund Taxes Liability

How IRS Proves Trust Fund Taxes Liability

Trust Fund Taxes Liability:

IRS will use aggressive method to collect unpaid withholding trust fund taxes from employers and “responsible individuals”. Payroll tax liability is know as “941 liabilities” The IRS will go extra mile to collect payroll tax and hold liable any and all individuals involved in running the business.

Here is an outline of the facts that would support the IRS’ determination to hold a proposed party responsible and willful for payroll tax/trust fund tax failure to withhold:

  1. Taxpayer made some of the financial decisions of the corporation
  2. Taxpayer determined what creditors to be paid
  3. Taxpayer determined which bills to be paid : This is different from just getting the checks ready for The President to sign. It had to be the proposed party’s full and final authority to issue the payment
  4. Taxpayer wrote checks
  5. Taxpayer signed checks
  6. Tax payer hired workers
  7. Taxpayer decided what the worker’s job duties were : This is different from being told by The President to organize and operate the office (although an IRS Officer may try twist these facts)
  8. Taxpayer was an owner of the business
  9. Taxpayer  issued payroll
  10. Taxpayer decided not to pay the payroll tax
  11. Once taxpayer found out about the payroll tax liabilities, taxpayer kept issuing payroll knowing that payroll tax would not be paid
  12. Taxpayer determined how much someone should be paid
  13. Taxpayer fired workers
  14. Taxpayer signed for loans for the corporation
  15. Taxpayer loaned money to the corporation
  16. Taxpayer applied for credit for the corporation

The above are some of the items the IRS must prove to hold someone liable for payroll taxes. A balancing test is used. If there are more facts towards the IRS than the proposed part, the IRS wins. Sometimes only one or two items is enough for the IRS to win. Depending on the weight of the facts.

Items to assist in your protest are statements from other individuals stating that not only did proposed party not do the above task but the above tasks were performed by someone else. It is unlikely that one person will be able to attest to all things, this is why you will need multiple statements. I suggest getting a statement under penalty of perjury documenting your witnesses statements. I can send you a sample if you want to see one. Go to my website and request a copy.

Further if there are documents, emails, receipts, texts, voicemail, etc. gather those documents/information so you can prove that the proposed party was not the person in charge of a specific task; or that someone else was giving directions to proposed party to perform some of the above task, or to show that someone else was in charge of a particular matter. It is those documents that you will need to get your hands on to help your case.


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