IRS Letters & Forms related to 941 taxes
There are several letters & forms you may receive if you owe 941 taxes.
The first thing you might need if you owe 941 taxes, is an actual 941 Quarterly Withholding Tax Return. I have also left a link to the instructions for Form 941. You will need to file all of your outstanding or un-filed 941 tax returns if you hope to get a resolution to your tax situation. These returns are due quarterly. So once you file all of your outstanding returns, you will want to make sure that you file all of your future 941 returns on time.
941 taxes are what is called a Trust Fund tax. This means that a business is supposed to hold the taxes in trust for the Federal Government. It also means that the IRS can hold you personally responsible if your business owes on its 941s.
If the IRS decides to hold you personally responsible, they will do an investigation to determine who is responsible. Their investigation involves looking into who is signing checks for the business. The IRS Revenue Officer assigned to the case will ask to see canceled checks and the business’ bank signature card. They are trying to find out who has the authority to sign checks for the business. If someone can write checks, they are determining which bills are being paid.
The IRS Revenue Officer will then interview anyone they think is responsible for making the Federal Tax Deposits or anyone who had a fiduciary responsibility to make sure the deposits were being made. The interview is called a 4180 interview. The 4180 interview consists of a lot of questions about who determined the financial policy for the business including:
Who signed checks for the business?
Who filed the tax returns?
Who opened the bank accounts?
Who are the officers?
The 4180 interview also has questions like:
What did you do when you found out about the tax debt?
Who was present at discussions about the tax debt?
What decisions were made in regards to the tax debt?
If the IRS Revenue Officer decides that there is sufficient evidence to prove that someone was willful and responsible for a 941 tax debt, then they will send them an 1153 Letter. The 1153 letter is sent to that person’s home address as it has now become a personal tax matter. Once an 1153 Letter is sent, you have 60 days to file a protest stating that you do not believe that you should be held personally responsible. The last page of the 1153 Letter is Form 2751. Form 2751 shows what the proposed assessment will be. By signing this form you are agreeing that you are responsible for the Trust Fund. You do not have to sign the form. If after 60 days you have not submit a protest or appeal, then the IRS will move forward with assessing you. Ultimately a Civil Penalty will show up on your Social Security Number for each period where there is a Trust Fund balance.
A good way to avoid owing 941 taxes is to get a payroll service like ADP. Phoenix Financial Group referrals will get discounted payroll services from ADP. Call us to find out how. A payroll service will make your Federal Tax Deposits for you through EFTPS. They can also file your returns for you.
Call Phoenix Financial Group at (888) 572-2179 or email us at info@pfgtax.com.