Seeking Protection from the Trust Fund Recovery Penalty

Many tax-exempt organizations board members who serve on a voluntary basis. It is not uncommon for an individual, after making a sizeable donation to a tax-exempt organization, to be offered a seat on its board of directors. Both for-profit and tax-exempt employers are required by law to withhold fr...

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Bibliographic Details
Published in:The CPA journal (1975) 2009-11, Vol.79 (11), p.36
Main Authors: Bird, Bruce M, Haynes, Christine M, McCraw, J Harrison, Platau, Steven M
Format: Article
Language:English
Subjects:
Bankruptcy
Boards of directors
Chairman of the board
Employees
Employers
Federal court decisions
Federal government
Liability
Medicare
Nonprofit organizations
Payroll taxes
Responsible persons
State court decisions
Tax exempt organizations
Taxation
Trust funds
Volunteers
Wages & salaries
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Summary:Many tax-exempt organizations board members who serve on a voluntary basis. It is not uncommon for an individual, after making a sizeable donation to a tax-exempt organization, to be offered a seat on its board of directors. Both for-profit and tax-exempt employers are required by law to withhold from their employees' wages federal income, FICA, and Medicare taxes. Those funds are often referred to as trust fund taxes and must be remitted to the federal government. The federal government can collect unremitted trust fund taxes from anyone who is determined to be a responsible person. Under IRC section 6671(b), this includes an officer or employee of a corporation who is under a duty to collect, account for, or pay over any withheld tax, but who willfully fails to do so. For purpose of assessing liability under IRC section 6672, willfulness requires a voluntary, conscious, and intentional act, but not a bad motive or evil intent.
ISSN:0732-8435