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What should practitioners do if the IRS assesses a fraud penalty related to payroll tax use?
PostedNovember 17, 2025
UpdatedNovember 17, 2025
ByKlemens Raab
Review the facts carefully and challenge the penalty if it lacks merit. If the funds were used for legitimate, unavoidable expenses (like business survival), and there was no intent to deceive, then the penalty may not be justified.
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Resolving Payroll Tax Debts
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- How long does a taxpayer have to protest a Letter 1153 assessment?
- What is IRC 3505?
- What are the criminal statutes associated with payroll tax noncompliance?
- Has there been an increase in criminal payroll tax enforcement?
- What is the FTD Alert Program?
- What are the three FTD Alert categories?
- What is the IRS's goal with FTD Alerts?
- How quickly should a Revenue Officer respond to an FTD Alert?
- What is the IRS doing since 2022 to address payroll tax misuse?
- Can payroll tax misuse lead to income tax fraud charges?
- What should practitioners do if the IRS assesses a fraud penalty related to payroll tax use?
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