4180 Interview – What Columbus Business Owners Should Know

When a business owes 941 employment taxes to the Internal Revenue Service, when a revenue officer is assigned to resolve the businesses tax debt, part of the collection process is also to determine which individuals may be personally assessed the trust fund portion of the 941 taxes.  In doing so, the IRS uses what is called the 4180 Interview. This article provides an overview of issues and items related to the 4180 Interview. It is intended for Columbus business owners and representatives to understand their rights and responsibilities before submitting to the 4180 interview. If your business owes 941 employment taxes, get in touch with the McGuire Law Firm to learn more. 

What is the 4180 Interview?

The 4180 Interview is the interview conducted by the IRS to help determine which individuals could be willful and responsible parties for a businesses failure to collect and pay employment taxes to the government.  The interview is conducted between the IRS revenue officer and the applicable individuals, and perhaps the individuals attorney if they are represented.

When is the 4180 Interview Conducted?

The 4180 Interview is conducted when the revenue officer is working to collect the businesses 941 tax liability.  When the revenue officer is assigned to resolve the 941 tax liability, in addition to collecting financial information for the business, the revenue officer will also request documents such as cancelled bank checks and the signatory cards for the businesses bank accounts.  The revenue officer will use this information to determine which individuals should be contacted in an attempt to conduct the 4180 Interview.  Thus, the interview or interviews will be conducted as the business and revenue officer are working towards a resolution of the 941 liabilities.

What Information is Asked or Gathered During the 4180 Interview?

As a whole, the interview is aimed at determining who the willful and responsible parties within the business are for failing to pay the 941 taxes.  Willfulness in this context means knowledge and responsibility means authority or control.  Thus, the following questions are likely to be asked: (i) what was your title or position within the company?; (ii) when did you become aware of the tax liabilities?; and, (iii) what was done or what actions were taken to resolve the tax liabilities and what company meetings were held?  Additionally, the individual will be asked whether they did or had the authority to do the following for the company: determine financial policy for the business, pay or authorize payment of bills, prepare 941 tax returns, make or pay the federal tax deposits and like questions.  It is relatively obvious the questions are asked to determine who was doing what within the business and who had the authority to take action or delegate action.

What Happens After the 4180 Interview is Conducted?

After the interview is conducted and the revenue officer completes their trust fund investigation the IRS can either decide to propose or not propose the trust fund recovery penalty against the applicable individual or individuals.  The trust fund recovery penalty is the portion of tax withheld from the employee’s paychecks hence the word “trust” as the idea is the business was holding this portion of the tax in trust from the employee to pay over and deposit with the government for the 941 taxes.  If the IRS does not propose the personal assessment of the trust fund, the individual is not assessed the trust fund.  If the IRS does propose the personal assessment of the trust fund, the individual will receive a notice in the mail stating the proposed assessment, the applicable tax periods and dollar amounts of the trust fund.  The individual has 60 days to protest the proposed assessment of the trust fund by filing a formal protest with the IRS.

What Happens if an Individual is Assessed The Trust Fund Recovery Penalty After the Interview?

If an individual is assessed the 941 trust fund after the 4180 Interview, the tax debt is treated like a separate debt from the businesses 941 liability and the IRS will look at the individuals financial ability to pay.  Thus, the individuals equity in assets, income and other financial circumstances come in to play separate from the business.

What if the Individual Pays the 941 Trust Fund?

If the individual pays the trust fund prior to assessment then there is no trust fund or tax to assess and thus if the 4180 Interview had not been conducted yet, there would be no reason to conduct it.  If the individual had been assessed the trust fund and then paid the trust amount, any collection efforts towards that individual would cease.  Further, it is important to note that the trust is a part of the total business 941 tax debt.  Thus, if the trust were paid in full, it would reduce the overall business 941 tax liability as well.

If your business owes 941 taxes to the IRS or you have been contacted by the IRS to conduct the 4180 Interview, it is highly recommended you speak with a tax attorney or otherwise competent tax advisor.  You can discuss your tax issues with a Columbus tax attorney at The McGuire Law Firm and a tax attorney can guide you through the process as well as help resolve any tax liabilities of your business or that you may have been personally assessed. Get in touch for a free consultation.