Every employer is required to pay the tax withheld from their employees. Often businesses do not have the money and fail to deposit the tax as required. This can be for a myriad of reasons. However, I don't care about the reason. The IRS or state tries to collect the tax. That is this post's topic.
How do you help this desperate position.you have placed yourself into? Designate the payments you make to the IRS are to the TRUST FUND TAX. The trust fund tax is the tax withheld from the employee. Pay that tax first. The trust fund tax payment is not deductable. However, the IRS treats you as a trustee that screwed both his employees and the IRS. Therefore, mark the payment to be applied to trust fund.
Officers and other responsible persons will discover that they may be treated as personally liable for the trust fund taxes. Therefore, PAY THE TRUST FUND TAX!
You can only designate the application of a payment if it is voluntary. The IRS will treat a non-designated payment or a payment from a levy as non-designated. They will apply the payment to the penalty, interest, non-trust fund tax, and finally trust fund. If you can designate the payment you are decreasing your personal liability potential.
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