That afternoon Ben called Branch Jazzwell a noted tax attorney about his need for a consultation. After a fee was agreed to, he appeared at the lawyers office. Ben explained the facts of the case to Branch and brought the payroll statements that he had for the taxes involved. Branch reviewed them thoroughly. Branch explained to Ben that these trust fund taxes are assessed against officers responsible for paying over and withholding taxes. “However, there is only liability if the failure to pay is intentional, not merely negligent. It appears that in your case, you have a defense, it’s the other guys fault, the other guy who split, the other guy, who had the secret bank account, the other guy who was stealing money from the company.” “How do I fight this, I got a bill from the IRS for $43,000 and I”m sure one will follow from the state?” asked Ben.

“You could pay the whole tax and ask for a refund, but that’s not necessary. Your trust fund obligations are called divisible taxes. That means that your obligation is determined on an employee by employee basis. Thus, you merely need to pay the tax for one employee for one quarter, and apply for refund. After six months, you can take the IRS to court and seek a refund. There is a risk to this strategy. The IRS can and will countersue you and if you lose, you have to wait at least 20 years and up to 40 years to be cleared of this liability instead of ten years. But there is no guarantee that they wouldn’t sue you anyway to get that kind of judgment (even though to date they rarely do so). If what you are telling me is true, you have a good case, but nothing’s a guarantee”, Branch answered. “And if you win, you might get your attorney’s fees”, he added. Branch then went on to discuss the cost of the litigation.

“I guess we should go for it, we have nothing to lose” said Ben.