Civil Penalty- CTFP and Your Business

If you are a corporation (that has employees) be that an S-Corp, C-Corp,LLC where you file 941's, 940, 1120,1065, then you must file business tax returns and pay income tax and payroll tax. However, those that receive a 1099- Misc C with no employees and or an LLC with no employees;these are examples where the TP is 100% responsible for the tax liability.

A business must be compliant by this I mean at least 2 quarters of their estimated tax payments paid and the current Federal Tax Deposits up to date. For those receiving 1099, LLC , they will need to make Quarterly Estimated tax payments. Business's that are corporations or partnership's can easily be held personally liable or responsible for what is owed to the IRS. Any check signers, owners, investors (those in position of responsibility for accounting or payroll( can be held personally liable if the IRS cannot retrieve the liability from the business.

The CTPF (Civil Trust Fund Penalty) is applied when a corporation withholds a portion of the taxpayers paycheck and not making federal tax deposit each month. Corporations withhold FITW (Federal Income Tax Withholding),SS and Medicare from each employee on their payroll. If this portion, belonging to the IRS is not paid, they will be held personally liable if the IRS can't collect on the business. Therefore the persons will be assessed the trust fund portion of the tax that should have been paid to the IRS.

If you find yourself responsible or affected by this CTPF, contact a professional today that can help you settle your IRS tax debt.