Although the company is responsible for payroll tax, a portion of this tax may also be applied to senior C-Corporation executives. This portion of the tax is called the “Trust Fund” and includes only taxes withheld by employees but not filed with the IRS. It does not include the company`s Social Security and Medicare compensatory taxes, or any penalties or interest accrued on the credit. As a result of the obligation of an individual civil servant, both the administrator and the company are responsible for paying the tax on trust funds. However, the IRS does not double the amount owed, it is simply able to collect either from C-Corporation or from the executive, until the debt is paid. However, in the case of “explicit” instalment payment agreements under this provision, the IRS will not pursue the TFRP if all of the following conditions are met: a tax advisor can help you assess the most appropriate option for your business, and your tax professional can even help work with the IRS to set up the agreement. If your business goes into debt in the internal revenue department, it can be intimidating. The IRS has certain collection procedures that may include audits, audits of your corporate accounts, and requests for full payment of your tax refunds. However, the structure of C Corporation ensures a separation between its owners and the company and protects senior managers against the repayment of most of the company`s tax debts. A C-Corporation is always responsible for paying its own income taxes.
C-Corporations does not pass on profits or losses from business activities to its owners, as does the structure of S Corporation. When a C-Corporation accumulates income tax debts, it has the option to pay the balance in full or request a payment plan with the IRS to make payments for the debt over time. Payment plans are usually based on the creditworthiness of the business and the monthly payments correspond to the average monthly disposable income of the company. If you request a payment plan (instalment payment contract), it may take up to 90 days for your request to be processed. As a general rule, you have up to 3 to 5 years to pay your credit. Nevertheless, the IRS has adopted simplified procedures that allow companies whose labor taxes are long overdue to enter into instalment payment agreements with little or no opposition. See SBSE Memo. 05-0311-038 (March 28, 2011). The IRS recently updated the procedures outlined in this memo. IRS Memo SBSE-05-2013-0103 (23 December 2013) updated the guidelines for the operation of businesses in order to obtain instalment payments on depending labour taxes. .