Financial difficulties do not excuse payroll tax penalties.

The taxpayer, a dietary supplement manufacturer, failed to deposit employment taxes, pay the taxes reported on its payroll tax returns, and timely file payroll tax returns. The IRS assessed penalties and filed an intent to levy. The taxpayer argued it had reasonable cause under IRC Sec. 6656 for the failures because, during this time, (1) its accountant had embezzled over $1 million (although the accountant was ordered to pay only $80,000 in restitution) and (2) it was forced to incur $1.56 million in moving expenses and construction debt to comply with FDA regulations. The Tax Court held that the taxpayer failed to show that these costs affected its ability to timely file its tax returns or pay taxes and upheld the IRS's assessments of penalties, liens, and levies. Nutrition Formulators, Inc. , TC Memo 2016-60 (Tax Ct.).