The IRS continues to use Enforced Collection when it comes to unpaid payroll taxes and unfiled payroll returns. Enforced Collection can include a levy on the assets of the business, including the accounts receivable, equipment, automobiles, and the bank account. The IRS can also close a business for non-payment of payroll taxes. If the business is closed or files for bankruptcy protection, the IRS will look to the owner of the business for collection of the penalties, interest, taxes and trust funds. In the case of a corporation or a partnership, the IRS will look to the person responsible for paying the payroll taxes to collect the trust funds. This is known as the Trust Fund Recovery Penalty.
For many businesses, when they start to have financial problems one of the first things to happen is the payroll taxes are not paid on time and the payroll returns are not filed on time. Both of these are among the worst things to do when a business has fallen upon hard times.
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