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What is IRC 3505?
PostedNovember 17, 2025
UpdatedNovember 17, 2025
ByKlemens Raab
IRC 3505 allows the IRS to pursue third-party lenders or creditors who:
– Funded net payroll (i.e., wages minus taxes), and
– Knew the employer was not going to pay payroll taxes.
This rule targets lenders who enable non-compliance.
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Resolving Payroll Tax Debts
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