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Sunday, August 21, 2005

Extended Statute of Limitations for Responsible Officer Liability

The Internal Revenue Service takes the collection of employment taxes very seriously. For example, under the Internal Revenue Code "responsible officers" of employers may have personal liability to the IRS for employment taxes that are withheld from employees, but not paid over by their employers to the IRS.

In a determination that is not favorable to responsible persons, the IRS has concluded that a responsible person liable for the trust fund recovery penalty is subject to the same assessment period that applies to the employer's return. Thus, where the employer has committed fraud, willfully attempted to evade tax, or failed to file an employment tax return, an unlimited assessment period applies. Chief Counsel Advice 200532046.
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