Employers are required to pay employment taxes for their employees. When employers do not pay the required employment taxes directly to the Internal Revenue Service (IRS) or state taxing agency, such as the Comptroller of Maryland, the taxing agency will attempt to collect these funds from the employer and can also collect these funds from responsible individuals who can be personally assessed.
The IRS and Comptroller of Maryland can use tax levies, wage garnishments, bank garnishments and tax liens to collect these funds from the business or responsible individuals. In general, neither the Comptroller of Maryland or IRS will make assessments against the responsible individuals if the business is working to resolve the debt issue and if the problem does not continue and the business stays in compliance.
The portion of tax which is assessed against the individual is called the Trust Fund Recovery Penalty (TFRP). The assessment can sometimes be up to sixty percent (60%) of the original assessment against the business. Once the IRS or Comptroller of Maryland makes this TFRP assessment, the taxing agency can collect against any individual assessed with the TFRP, even if more than one person has been assessed. The IRS or Comptroller of Maryland can also pursue collection against the business and individual simultaneously.
The tax attorneys at Longman & Van Grack regularly work with business to resolve the outstanding tax debts for employment taxes. In addition, Longman & Van Grack will work with the owners or responsible parties to determine who should be assessed with the trust fund recovery penalty and working out a plan to resolve the liability with the IRS or Comptroller of Maryland.