Frost & Associates, Attorneys at Law
Call Today 202-618-1873

The Trust Fund Recovery Penalty, Part 2: the importance of notice

In the first part of this post, we began discussing a powerful hammer in the IRS’s enforcement toolkit for payroll taxes.

This hammer is the trust fund recovery penalty (TFRP). Last week, we discussed what it is and how the IRS can use it to go after individuals who willfully fail to collect or pay over certain business and employment taxes.

In order to pursue the TFRP, however, the IRS must satisfy various procedural requirements. In this part of the post, we will inform you about a recent case in which a federal court struck down the IRS’s attempt to impose the penalty because the IRS did not meet these requirements.

 

The requirement that the IRS did not meet was notice of its intention to impose the TFRP. The case was decided by a federal court in North Carolina and was called United States v. Appelbaum.

Under Section 6672(b) of the Internal Revenue Code, the IRS is required to give written notice before assessing the TFRP. That notice is normally provided by mailing Letter 1153, usually along with a related form and publication.

In the Applebaum case, however, there was insufficient evidence in the IRS’s files to show that the notice was actually sent. The court therefore invalidated the attempt to impose the TFRP.

But the IRS does have other tools besides the TFRP to encourage compliance with employment tax obligations. In particular, the IRS has put in place new programs to identify and reach out to small businesses that have run into difficulty with payroll tax issues.

It is also important to recognize the difference between a civil tax penalty and a potential criminal investigation for tax evasion or tax fraud. We will try to highlight that distinction in an upcoming post.

No Comments

Leave a comment
Comment Information
Every Tax Problem Has A Solution

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Contact us today!

Frost & Associates, Attorneys at Law
1629 K Street NW Suite 300
Washington, D.C. 20006

Phone: 202-618-1873
Fax: 888-235-8405
Washington Law Office Map

Columbia Office
10440 Little Patuxent Parkway
Suite 300
Columbia, MD 21044

Phone: 202-618-1873
Fax: 888-235-8405
Columbia Law Office Map

Annapolis Office
888 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 202-618-1873
Fax: 888-235-8405
Map & Directions

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 703-621-7169
Fax: 888-235-8405
Map & Directions

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 240-599-5009
Fax: 888-235-8405
Map & Directions

Google+
Find us on...
  • Facebook
  • Twitter
  • Linked In