Attorney-at-Law

TRUST FUNDS ARE A GRAEV MATTER

In Uncategorized on 01/21/2020 at 16:05

Judge Albert G (“Scholar Al”) Lauber is diligently sifting the silt that Graev unleashed upon an unsuspecting world, and today turns his attentions to the TFRPs, the hundred-percent chops for responsible persons who behave irresponsibly and finance their businesses with the withholding from payroll.

Apparently, David J. Chadwick, 154 T. C. 5, filed 1/21/20, is one such. IRS wants to chop Dave for a bunch from each of his two wholly-owned LLCs. A serious deliciton, to be sure, but is it Graeven in stone that a Boss Hoss is required to sign off prior to the Letter 1153?

Yup.

“Section 6751(b)(1) provides that “’[n]o penalty under this title’–that is, no penalty under the Code—’shall be assessed unless the initial determination of such assessment’ receives the requisite supervisory approval.  Section 6672(a), which authorizes the assessment of TFRPs, provides that a responsible person who fails to collect or pay over any tax ‘shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.’  The plain text of section 6672(a) indicates that a TFRP is a ‘penalty’ under the Code.” 154 T. C. 5, at pp. 11-12 (footnote omitted).

Now we all know IRS can collect only once. If the LLCs have money and pay, Dave is off the hook. So isn’t the TFRP really a tax? No, because it only applies to responsible persons who willfully fail to pay. And Section 6671 just says the chops are to be collected as if such penalties were taxes; that doesn’t make them taxes.

And when it comes to “as if”, Judge Scholar Al is a true disciple of the early Twentieth Century philosopher Hans Vaihinger. See my blogpost “Als Ob,” 11/22/16.

But IRS has learned from hard experience, and produces Forms 4183s from the appropriate Boss Hosses prior to the Letters 1153 hitting the postbox.

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