Skip to main content

Posts

Showing posts from September, 2011

IRS Abatement of Penalties and Interest | No Magic Wand, You Must Establish Reasonable Cause and Exercised Ordinary Business Care and Prudence

  Click here for updated 2018 Post  The first question many clients ask me is, "were you able to get the IRS (and/or State) to waive any of the penalties or interest?" The frustrating thing for me is that many people ask this before we even have an agreement in place to resolve the back taxes.  Talk about putting the carriage before the horse!   If you are looking to hire someone to prepare a Penalty Abatement request for you, please fill out my questionnaire and I will advise you what I believe your chances are to qualify and will provide you with a quote if it appears you have a reasonable shot of convincing the IRS to abate some/all your penalties. The bottom line is that many people think they are special and deserve a break but obviously that is not the case.  There is no magic wand that is used to abate penalties and the majority of interest can not be abated at all (only the interest that is related towards the penalties, the other interest

Figuring the Amount of the IRS Trust Fund Recovery Penalty for Unpaid 941 and 944 Payroll Taxes | Calculation of the Civil Penalty 6672 IRS Personal Assessment of the Trust Fund Recovery Penalty

The Social Security (FICA) tax consists of two parts: 1. Old-age, Survivors, and Disability Insurance (Social Security) and 2. Hospital Insurance (Medicare). The trust fund portion of withholding tax consists of the income tax withheld and the employee portion of FICA. To figure the amount of the trust fund of any particular period you will need to look at the IRS Forms 941 or 944 (most businesses file quarterly 941 taxes). 1. Go to Line 3, income tax withheld from wages, tips and other compensation. Take 100% of this amount.  2. Next go to Line 5d (to sum of 5a + 5b +5c) and take 1/2 of this amount. 3. Add steps 1 and 2 and there you have it, the total trust fund amount. If you paid a portion of the tax due it will be a little more difficult to determine how much of those taxes were applied towards the trust fund portion as the IRS will apply a portion towards the non-trust amounts (employer matching portion of FICA).   This taxpayer has a trust fund balance of $14,59