The situation
During a slow period, a restaurant owner in New York borrowed from withheld payroll taxes to make ends meet — a common but dangerous move. The balance grew to about $140,000, and the IRS, which treats unpaid trust fund taxes as its highest priority, assigned a revenue officer threatening to shut the business down.
What we did
- We engaged the assigned revenue officer immediately and got the business current on new payroll deposits to stop the bleeding.
- We addressed the Trust Fund Recovery Penalty exposure, documenting responsibility and willfulness to limit personal liability.
- We negotiated a business installment agreement the IRS would accept while the company kept operating.
- We brought any missing employment tax returns current so the account was fully compliant.
The outcome
The business stayed open. The IRS accepted a structured payment plan on the $140,000, halting the threat of closure, and the owner’s personal trust fund penalty exposure was contained. The restaurant is now current on deposits and steadily paying down the back balance.
Payroll tax is personal
Unpaid trust fund (withheld) taxes can be assessed personally against owners and officers. Getting current on new deposits and engaging the IRS early are critical first moves.
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About these stories
Illustrative client scenarios based on common case types. Individual results vary. These scenarios are composites drawn from common case types we handle at US Certified Tax Services; they are not specific named clients and are provided for illustration only. Outcomes depend on your individual facts and IRS determinations. For a review of your situation, request a free consultation.