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Trust Fund Recovery Penalty

IRS must provide taxpayers a pre-assessment determination of responsible person penalty

IRS must provide taxpayers a pre-assessment determination of responsible person penalty

Romano-Murphy, (CA 11 3/7/2016) 117 AFTR 2d ¶ 2016-492 The Court of Appeals for the Eleventh Circuit, vacating and remanding a Tax Court decision, has held that Code Sec. 6672(b)(3)(B) — which provides for an extension of the statute of limitations on assessment where the taxpayer protests IRS’s preassessment determination of liability with respect to […]

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First Circuit upholds corporate officers’ responsible person status

First Circuit upholds corporate officers’ responsible person status

Schiffmann v. U.S., (CA 1 1/29/2016) 117 AFTR 2d ¶2016-386 The Court of Appeals for the First Circuit has upheld a district court’s determination that two officers of a corporation, that was years behind on its income and payroll taxes, were liable for the Code Sec. 6672 penalty. The Court found that both individuals, within […]

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Owner who agreed not to act independently was still a responsible person

Owner who agreed not to act independently was still a responsible person

Waterhouse, (Ct Fed Cl 7/23/2015) 116 AFTR 2d ¶ 2015-5080 The Court of Federal Claims has held that the 40%-owner vice president of a corporation, who had agreed with the 40%-owner president of the corporation not to exercise any independent authority over the corporation’s finances, was nonetheless a responsible person for purposes of Code Sec. […]

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Corporate director was responsible person, but dispute remained as to willfulness

Corporate director was responsible person, but dispute remained as to willfulness

Gann v. U.S., (05/28/2015 Ct Fed Cl) 115 AFTR 2d ¶2015-782 The Court of Federal Claims has determined on summary judgment that the director/majority shareholder of a staffing company was a “responsible person” for purposes of the Code Sec. 6672 penalty, but found that whether he acted willfully in failing to pay the company’s payroll […]

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Owner Who Delegated Duties To Embezzler Was Liable For Responsible Person Penalty

Owner Who Delegated Duties To Embezzler Was Liable For Responsible Person Penalty

William R. Shore v. U.S., (DC ID 12/4/2014) 114 AFTR 2d ¶2014-5496 A district court has denied a refund of a responsible person penalty that had been paid by the owner of a company who had delegated duties to a manager who ended up embezzling funds from the company. While the court sympathized with the […]

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IRS’s Post-Appeals Mediation Procedures Clarified & Made Available Nationwide

IRS’s Post-Appeals Mediation Procedures Clarified & Made Available Nationwide

Rev Proc 2014-63, 2014-52 IRB; IR 2014-115 In a Revenue Procedure and accompanying news release, IRS has announced the rules for the nationwide rollout of post-Appeals mediation for Offer in Compromise (OIC) and Trust Fund Recovery Penalty (TFRP) cases. IRS’s Office of Appeals originally launched post-Appeals mediation for OIC and TFRP cases as a pilot […]

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Partner secondarily liable for partnership’s unpaid employment taxes

Partner secondarily liable for partnership’s unpaid employment taxes

Pitts v. U.S. (DC CA 08/12/2014) 114 AFTR 2d ¶ 2014-5171 A district court, affirming a bankruptcy court, has held that a partner was secondarily liable for a partnership’s unpaid employments taxes and that IRS could proceed with collection from her without having taken specific actions against her individually. The district court also found that […]

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Taxpayer couldn’t get summary judgment to abate trust fund recovery penalty

Taxpayer couldn’t get summary judgment to abate trust fund recovery penalty

Robert Moser v. U.S., (DC AR 05/27/2014) 113 AFTR 2d ¶ 2014-856.  A district court has refused to abate trust fund recovery penalties assessed against a company vice president under a request for summary judgment made by him. The facts before the court were not sufficient for it to determine that he did not act […]

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Look out: greater future enforcement of responsible person penalty likely

Look out: greater future enforcement of responsible person penalty likely

Click here for TIGTA’s report, “Trust Fund Recovery Penalty Actions Were Not Always Timely or Adequate” (May 23, 2014). The Treasury Inspector General for Tax Administration (TIGTA) has issued a report in which it: (a) finds that IRS has often not taken adequate and timely actions in assessing and collecting the Code Sec. 6672 responsible […]

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Supreme Court won’t review bankrupt airline CFO’s liability for responsible person penalty

Supreme Court won’t review bankrupt airline CFO’s liability for responsible person penalty

Nakano, (CA 9 2/18/2014) 113 AFTR 2d 2014-941, cert denied 5/27/2014. The Supreme Court has declined to review a Ninth Circuit decision holding that neither an airline corporation’s obligations resulting from its bankruptcy, nor legislation that provided relief to airlines after the Sept. 11, 2001 terrorist attacks, were adequate excuses for the corporation’s chief financial […]

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Corporate officers’ liability for responsible person penalty upheld on summary judgment

Corporate officers’ liability for responsible person penalty upheld on summary judgment

In Schiffmann v. United States, (DC RI 4/09/2014) 113 AFTR 2d ¶ 2013-720, a district court has determined on summary judgment that several officers of a corporation that was years behind on its income and payroll taxes were liable for the Code Sec. 6672 penalty. The court found that each individual, within certain time periods, […]

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District Court holds former corporate officer as responsible person liable for trust fund penalty

District Court holds former corporate officer as responsible person liable for trust fund penalty

In U.S. v. Guerin, (DC CA 4/28/2014) 113 AFTR 2d ¶ 2014-774, a district court has determined on summary judgment that a former corporate officer was a “responsible” person under Code Sec. 6672 who was liable for the trust fund recovery penalty. While the taxpayer argued that strategic and significant financial decisions were made collaboratively, […]

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Bankruptcy obligations no excuse for responsible person’s failure to remit trust fund taxes

Bankruptcy obligations no excuse for responsible person’s failure to remit trust fund taxes

In Nakano v. US, (CA 9th Cir. 2/18/2014) 113 AFTR 2d ¶2014-510, the Ninth Circuit, affirming a district court, has held that neither an airline corporation’s obligations resulting from its bankruptcy, nor legislation that provided relief to airlines after the Sept. 11, 2001 terrorist attacks, were adequate excuses for the corporation’s chief financial officer’s failure […]

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Case Alert: Wife liable for responsible person penalty despite limited involvement in company

Case Alert: Wife liable for responsible person penalty despite limited involvement in company

The Court of Appeals for the Fourth Circuit, in Johnson v. U.S., (CA 4th November 5, 2013) 112 AFTR 2d ¶ 2013-5452, has affirmed a district court ruling that a sole shareholder of a company was liable for the responsible person penalty even though she had minimal involvement in its day-to-day operations and did not […]

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Trust fund penalty payment based on small payroll sample was insufficient to bring a refund suit

Trust fund penalty payment based on small payroll sample was insufficient to bring a refund suit

The Court of Federal Claims in Kaplan v. United States, (Ct Fed Cl 10/9/2013) 112 AFTR 2d ¶2013-5375, has dismissed a case seeking to recover partial payments of the Code Sec. 6672 trust fund tax penalty because the payments were insufficient to satisfy even a liberal exception to the rule requiring full-payment of a tax […]

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Contact between IRS Appeals and Area Counsel not prohibited ex-parte communications

Contact between IRS Appeals and Area Counsel not prohibited ex-parte communications

In Hinerfeld v. Commissioner, (2012) 139 T.C. 10, the Tax Court has held that communications between IRS’s Appeals Division and Area Counsel regarding an amended offer in compromise (OIC) did not fall in the category of prohibited “ex parte” communications. The case concerned an OIC with regard to unpaid trust fund recovery penalties under Code […]

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Trust Fund Recovery Penalty: First Circuit finds majority owner and financier liable for Section 6672

Trust Fund Recovery Penalty: First Circuit finds majority owner and financier liable for Section 6672

Editor’s Note:  this is a scary case since the Court found that the financier, who admittedly acted in the role of investor and “remote” advisor, could still be held liable for the Trust Fund Recovery Penalty (TFRP). The case serves as a warning to all who enjoy the title of being somebody in a company, […]

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Case Alert: Maryland Business Owner Sentenced for Failing to Pay Employment Taxes

Case Alert:  Maryland Business Owner Sentenced for Failing to Pay Employment Taxes

Editor’s Note:  we have previously written about the dangers of business owners not paying their employment taxes.  The penalties range from personal liability for the payroll taxes under the Trust Fund Recovery Penalty, to criminal indictment and conviction.  In the case below, Richard Stewart pled guilty pursuant to a written plea agreement (statement of facts) […]

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Case Alert: U.S. Supreme Court refuses review of former corporate officer’s liability for Section 6672 penalty (Trust Fund Recovery Penalty)

Case Alert:  U.S. Supreme Court refuses review of former corporate officer’s liability for Section 6672 penalty (Trust Fund Recovery Penalty)

The U.S. Supreme Court, in the case of Conway, (CA 5 07/19/2011) 108 AFTR 2d 2011-5336, cert denied 04/16/2012, has declined to review a decision of the Fifth Circuit that the president/CEO of a defunct airline was a responsible person who willfully failed to remit excise taxes. The Fifth Circuit rejected the taxpayer’s claims that […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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