Today is March 17th 2023 and I'd like to welcome to this webinar on resolving 941 tax debts my name is Jason Bowman from tax marketing hq.com and for the next 15 minutes we're going to be discussing the special situations involved in resolving 941 tax liabilities why the liabilities are such a huge enforcement priority for the IRS and exactly how you can go about helping your clients with these employment tax problems so we're also assessing some specific penalties and some appeals options and of course we cannot discuss the 941 landscape without also talking about the trust fund every penalty the trust fund recovery penalty itself is a topic worthy of an hour or two of its own but again it's it's impossible to discuss the employment tax liability resolution without delving into the the trust fund world so we will be covering that there are there are a lot of trust fund items that are outside the scope of specifically what I'm going to be talking about day and so in the future I will be doing another webinar specifically on trust fund issues because there's just so much to cover within that all right so real quick the suck penalties first the first couple you should already be familiar with the failure to file and failure to pay penalties the failure to file penalties add up pretty quick it's 5% per month for the 25 percent cap there's also a minimum in case the the balance due on the return is that a really low or the original balance due on the return I mean and again mine were talkin 941 taxes here so minimum penalty 135 dollars or 100 percent of the tax view whichever is less the failure to pay penalty the failure...
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Unpaid trust fund taxes Form: What You Should Know
IRS Trust Fund Recovery Penalty — Employer Payments (Form 941) The trust fund recovery penalty is a sum of two parts: the balance of a tax liability and the penalty. The penalty is equal to the balance of the taxpayer's tax liability. To determine the penalty, the IRS looks at the total amount of tax with respect to the tax period in question. This part of the penalty can be significant, and you may be required to compensate the employer for any employer payments (Form 941) that your employees paid to you. The penalty is 100 per employee per tax period if unpaid for 1 year, 500 per employee per tax period if unpaid for 2 years, and increases with each payment. It can be a very substantial sum of money! Tax Deduction The trust fund recovery penalty can add to your tax due and can result in additional penalties, penalties on tax increases (Rate increases), and/or interest. The penalties for withholding (Form 941) and taxes collected (Form 941-EZ) are the same for income tax and Social Security taxes. In order to mitigate those penalties, it is necessary to properly file IRS Form 8606, Schedule EZ, each year and report any interest or penalties as a regular part of your income tax return. If the IRS collects the trust fund tax through an employer withholding, it is considered to have been paid by the employee. The trust fund recovery penalty is not taken into account in the calculation of the federal income tax due on employer withholding. The Trust Fund Recovery Penalty — Interest and Penalty on Late Filing The penalty amount is interest, which is 1% per month of the penalty amount, starting on the due date of each pay period and ending on the 30th day following the due date of your income tax return. You may incur penalties if you fail to make your tax returns on or before the due date. Penalty interest accrues the earlier the return is not filed. The penalty is not reduced by any amounts withheld during that period. You may incur penalties on penalties due to errors made on your return. The penalty amount is due and payable when the return has been filed, no later than 7 years after the calendar tax year for which the recovery is sought. If it has been 6 months since the return was filed, the penalty period for that year begins on the due date, regardless of when the deficiency or tax was actually paid.
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