In Uncategorized on 12/06/2017 at 17:10

When it comes to TFRPs, Section 6672 echoes the famous Three Musketeers’ motto. IRS can go after all, some or any responsible person. If more than one responsible type is kicking in, the others get credit. And they can fight about who overpaid in a separate lawsuit.

Sheila Woodley, 2017 T. C. Memo. 242, filed 12/6/17 thinks because two other responsible types are paying, she doesn’t have to pay.

Sorry, says Judge Lauber, IRS can mix and match until the trust funds are replenished for the years at issue.

“The IRS has also assessed TFRPs against [Ernie], another former owner of [Sheila’s sandwich shop], for the same trust fund tax liabilities.  During the pendency of petitioner’s CDP case, the IRS has received periodic payments toward [Sheila’s sandwich shop]’s tax liabilities from [Ernie] and/or from [Sheila’s sandwich shop’s purchaser].  For each payment it has received, the IRS has abated a corresponding portion of petitioner’s assessed TFRPs for the relevant tax period.” 2017 T. C. Memo. 242, at p. 6.

Sheila never contested the TFRPs until the CDP, but it was too late.  The Letter 1153 opens the door to Appeals and a dispute as to liability and amount. Sheila didn’t walk in.

Sheila claims the CDP was defective because her case was referred from FL to the USVI, where she resided.

“By virtue of this referral petitioner was able to present her financial information in a face-to-face meeting with a local IRS officer in the USVI. Because petitioner had not previously submitted financial documentation for consideration of a collection alternative, we find that the SO acted properly in making this referral.  Although petitioner asserts that the RO was somehow biased against her, there is no credible evidence to support that assertion.  Indeed, the RO recommended that petitioner be considered for an IA with monthly payments as low as $350.  In any event, there is no evidence that referral of the case to the RO in any way impeded the SO’s impartiality.  The SO, who conducted the actual CDP hearing, had no previous involvement with petitioner’s case.” 2017 T. C. Memo. 242, at pp. 9-10.

And whether the other responsible types paid less than they should is for another day and another court.

“Where multiple individuals have TFRP liability for the same underlying tax, the Code affords a responsible person a claim for contribution against other responsible persons if he or she has paid the IRS more than his or her ‘proportionate share of the penalty.’  Sec. 6672(d).  However, a claim for recovery against other responsible persons cannot be made in ‘an action for collection of such penalty brought by the United States.’  Sec. 6672(d)(1).  Rather, the taxpayer must seek contribution in an action ‘separate and apart from proceedings to collect the penalty brought by the United States.’ Thus, petitioner in this CDP case cannot seek to reduce her liability on the theory that she is being asked to pay more than her proportionate share of … delinquent taxes.” 2017 T. C. Memo. 242, at p. 12, footnote 3. (Citations omitted).

Takeaway- When selling (or buying) a business, sales taxes, franchise taxes, and withholding taxes require close examination of sellers’ records and returns, and careful drafting of instruments. And maybe even holdbacks of purchase price.



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