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5 Hastings Bus. L.J. [i] (2009)

handle is hein.journals/hbuslj5 and id is 1 raw text is: 







   HASTINGS BUSINESS LAW JOURNAL

VOL. 5                   WINTER 2009                    NO. 1


                     Table of Contents


                        ARTICLES

LEAVING MONEY ON THE TABLE AND PROVIDING AN
INCENTIVE NOT TO PAY-THE STORY OF A FLAWED
COLLECTION DEVICE
       T. K eith  F ogg  ....................................................... 1

       The tax gap represents the difference between the amount
of tax owed by taxpayers and the amount that is actually voluntarily
and timely paid. As of September 30, 2007, the IRS had $282 billion
of unpaid assessments on its books of which 20 percent represented
the unpaid payroll taxes due from employers. IRC Section 6672
gives the government a powerful tool to mitigate the tax gap, as it
gives it the right to pierce the corporate veil in pursuit of the
collection of unpaid payroll taxes. However, 6672 suffers from a
near fatal flaw which results in failure to incentivize taxpayers to pay
employment taxes when owed. In this paper, the author explains the
operation of 6672, explores the purpose of 6672 and addresses the
specific problem of the treatment of interest under 6672 by
examining the mechanics of the interest provisions, the misalignment
with similar statutes and the problems created for the IRS by the
current statutory construction.  The author then recommends a
solution-to remove 6672 from the assessable penalty provisions and
make it clear in the statute that interest charges against the
individuals responsible accrue from the due date of the corporate
return.

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