4180 Interview: What Columbus Business Owners Should Know About IRS Trust Fund Investigations

When a business owes 941 employment taxes to the Internal Revenue Service, a revenue officer may be assigned to resolve the liability. As part of that process, the IRS must determine which individuals may be personally assessed the trust fund portion of the 941 taxes. To do this, the IRS conducts what is known as the 4180 Interview.

This article provides an overview of the interview and what Columbus, OH taxpayers can expect.

What Is the 4180 Interview?

The 4180 Interview is conducted by an IRS Revenue Officer to determine which individuals may be considered willful and responsible parties for a business’s failure to collect and pay employment taxes.

The interview is held between the revenue officer and the applicable individuals, and their attorney may be present if they are represented.

When Is the 4180 Interview Conducted?

The 4180 Interview is conducted while the revenue officer is working to collect the business’s 941 tax liability.

In addition to gathering financial information, the revenue officer will request documents such as:

• Cancelled bank checks
• Bank account signatory cards

This information helps the IRS identify which individuals should be contacted for the interview. The interview (or multiple interviews) will occur as the revenue officer and the business work toward resolving the 941 liabilities.

What Information Is Requested During the 4180 Interview?

The purpose of the interview is to determine who within the business was willful and responsible for failing to pay the 941 taxes.

In this context:

• Willfulness refers to knowledge
• Responsibility refers to authority or control

Common questions include:

• What was your title or position within the business?
• When did you become aware of the tax liabilities?
• What actions were taken to address the liabilities and what meetings were held?
• Individuals are also asked whether they had the authority to:
• Determine financial policy
• Pay or authorize payment of bills
• Prepare 941 tax returns
• Make federal tax deposits
  

These questions help the revenue officer determine who had control or authority over the business’s financial decisions.

What Happens After the 4180 Interview?

After completing the interview and trust fund investigation, the IRS may either propose the trust fund recovery penalty or decide not to propose it.

• If the IRS does not propose the penalty, the individual will not be assessed.
• If the IRS does propose the penalty, the individual will receive a notice listing the proposed assessment, applicable tax periods, and trust fund amounts.

Individuals have 60 days to protest the proposed assessment by filing a formal protest with the IRS.

What If an Individual Is Assessed the Trust Fund Recovery Penalty?

If an individual is assessed the 941 trust fund after the 4180 Interview, the resulting liability is treated as a separate debt from the business’s 941 liability.

The IRS will review the individual’s:

• Equity in assets
• Income
• Overall financial circumstances

These factors determine how the IRS will pursue collection from the individual.

What if the Individual Pays the 941 Trust Fund?

If an individual pays the trust fund before assessment, there is no trust fund liability to assess, and a 4180 Interview would not be necessary.

If the individual has already been assessed and then pays the trust fund amount:

• IRS collection efforts against the individual stop
• The payment reduces the overall 941 tax liability of the business

Speak With a Columbus Tax Attorney About a 4180 Interview

If your Ohio business owes 941 taxes or you have been contacted by the IRS to participate in a 4180 Interview, it is highly recommended that you speak with a tax attorney or qualified tax advisor.

You can discuss your matter with a Columbus tax attorney at The McGuire Law Firm, who can guide you through the process and help resolve tax liabilities for your business or any assessments made against you personally. Get in touch today.