Payroll Tax Issues: Trust Fund Cases

Payroll Tax Liabilities

The Seriousness of Payroll Tax Issues

Payroll tax issues are among the most serious liabilities one can face with the IRS. These cases often receive heightened scrutiny and can lead to significant legal consequences if not addressed promptly and effectively.


Understanding the Trust Fund

The “trust fund” refers to the portion of payroll taxes that employers withhold from employees’ wages for income, Social Security, and Medicare taxes. This collected amount is held in trust by the employer until it is paid to the IRS. Failure to remit these funds is viewed seriously as it involves funds withheld but not paid to the government.

Person Resolving Back Tax Liabilities

Statutes of Limitations and Liabilities for Key Persons

  • The IRS typically has three years to audit payroll tax returns and ten years to collect payroll tax liabilities. However, trust fund recovery penalties can extend personal liability to key persons within a company, including non-owner management, who are responsible for withholding and paying these taxes.

Trust Fund Liabilities in OIC and Installment Agreements

  • Offers in Compromise (OIC): Resolving trust fund liabilities through an OIC can be challenging. The IRS assesses the taxpayer’s ability to pay, considering factors like income, expenses, and asset equity. The gravity of trust fund cases often demands a thorough and compelling argument for the IRS to consider an OIC.
  • Installment Agreements: When setting up installment agreements for trust fund liabilities, the IRS typically requires a full financial disclosure and often seeks higher monthly payments compared to other tax debts. The goal is to recover the unpaid trust fund taxes as quickly as the taxpayer’s financial situation allows.

We Specialize in Negotiating with the IRS

Given the complexities and seriousness of payroll tax issues, especially trust fund cases, professional guidance is crucial.

Your Partner in Resolution

We provide expert advice and representation to navigate through the resolution process, whether it’s through an OIC, installment agreement, or other appropriate channels. 

Schedule a Free Consultation

Let us help you tackle these challenging issues with the experience and knowledge necessary for a favorable resolution.