IRS and EDD Employment Taxes, Payroll Taxes & the Trust Fund Recovery Penalty (Dual Personal Liability)

Pasadena tax attorney Daniel W. Layton has substantial experience defending his clients in employment tax disputes, whether handling overly aggressive collection tactics by the Internal Revenue Service or the California EDD (Employment Development Department) on back payroll taxes or over-assessed payroll taxes.

Mr. Layton learned about the IRS from the inside out, working as the IRS's in-house and trial counsel, where he trained Revenue Officers in their tools and limitations. He understands how to speak the government's language and address their often unspoken concerns. When necessary, he knows the tools necessary hold the government accountable for its missteps.  When a lien or levy is filed against your company for Form 941 or 940, employment and unemployment, taxes, it is critical to protect your rights before the Internal Revenue Service or the EDD issues bank levies or even issues levies directly to your clients.  Over-aggressive collections can impair your company's ability to rebound from a temporary low point or potentially put your company permanently out of business your company's rights aren't exercised.

On the federal level, the IRS is not only concerned with employment taxes (Form 941) and unemployment taxes (Form 940), but has made the collection of the "trust fund" portion (the employee's share) of the employment tax liabilities a priority.  In several recent cases, the IRS has turned these otherwise civil matters into criminal investigations and prosecutions. Often, these criminal investigations are unwarranted but occur when companies engage in self-representation, leading to misunderstandings and innocent mistakes that are taken wrong by the investigator.

Even if the case remains a civil matter, the IRS could begin a "Trust Fund Recovery Penalty" investigation under Internal Revenue Code Section 6672, to impose personal liabilities against an officer, owner, and any other responsible person within a company (including LLC), corporation, or partnership.  Likewise, the EDD can impose dual company/personal liability for all outstanding payroll tax liabilities where a person was both willful and responsible as to the failure to pay the taxes.

Each case is unique and, whenever possible, companies must pay over their employment taxes in full and on time. However, the IRS's guidelines and EDD's procedures also provide for relief where a company cannot pay taxes despite making all efforts. In those cases, a compromise or payment plan may be in the interest of both the company and the government.

Pasadena Tax Attorney Daniel W. Layton has experience, where appropriate, negotiating with the IRS through Offers in Compromise of employment/unemployment taxes and Trust Fund Recovery Penalties. In cases where the IRS's enforced collections hurt the company's ability to stay tax compliant, Mr. Layton has convinced the IRS to withdraw levies in order to allow his clients to continue operating their businesses and enter into a voluntary payment plans or installment plans.  Mr. Layton has successfully appealed IRS determinations to impose the Trust Fund Recovery Penalty (dual company/personal liability penalty) against individuals, convincing the IRS to close its case with no personal liability against business owners for payroll trust fund taxes. Although each case is different and rests on its own individual facts, you can rest assured your case is in good hands with tax attorney Daniel W. Layton.