Federal Tax Attorneys in Dallas, TX – Underreported Taxes
Underreported taxes occur when a taxpayer’s reported tax is less than what is legally owed. Not all tax debts are treated the same under federal law. Personal income taxes and payroll taxes have different rules:
- Personal income taxes: Subject to penalties and interest for underpayment, but generally do not trigger trust fund recovery penalties.
- Payroll taxes: Include income taxes and FICA taxes withheld from employees’ wages. These are considered trust fund taxes under 26 U.S.C. §7501(a). Employers must hold these funds in trust and remit them to the IRS.
Failure to remit payroll taxes can result in personal liability for “responsible persons” under 26 U.S.C. §6672(a). The trust fund penalty can be 100% of the unpaid trust fund portion of the taxes if the failure is willful.
Who is a responsible party?
Individuals with financial responsibility for collecting the taxes, turning them over to the IRS, and making financial decisions of the organization. Responsible parties can range from secretaries and office managers to the CFOs and owners of the company.
The IRS typically conducts interviews to identify responsible parties. In cases involving large liabilities or suspected fraud, IRS-Criminal Investigation (IRS-CI) may initiate a criminal investigation.
Why Responsible Party Matters in Underreported Business Tax Cases
Business entities are responsible for paying their taxes. But business entities are legal fictions; they need human beings to conduct their affairs. So, tax law allows the IRS to pursue individuals who control payment decisions to ensure taxes are collected and remitted. Understanding whether you may be a responsible party is crucial, and timely legal counsel is essential.
How Coleman Jackson, P.C. Can Help
Our experienced Dallas-based federal tax attorneys assist employees as well as the entity in underreported tax matters and responsible party probes. Our services include:
- Determine the nature and amount of tax liabilities and investigate how they arose.
- Connect clients with CPAs for preparation or amendment of original or delinquent tax returns (our law firm does not prepare tax returns).
- Negotiate payment options and representation before the IRS Independent Office of Appeals.
- Represent clients in IRS audits, criminal probes, and civil or criminal court matters.
Need a Skilled Federal Tax Lawyer on Your Side?
Contact the experienced Federal Tax Attorneys at Coleman Jackson, Professional Corporation today at (214) 599-0431 for help with underreported tax matters, IRS audits, and litigation.
