When Business Tax Debt Becomes Personal: IRS Collection, Payroll Tax Liability, and Owner Exposure

Agustin Arbulu, JD, LLM (Tax), Partner, Senior Tax Attorney | Ayar Law

Agustin Arbulu is a Partner and Senior Tax Attorney with over 30 years of specialized experience in federal and state tax controversies, IRS collection defense, and complex tax resolution matters. Recognized as a leading authority on business owner exposure in IRS disputes, he provides sophisticated legal counsel to closely held businesses and their owners navigating the intersection of corporate tax liability and personal financial exposure—a critical distinction often misunderstood by business owners facing collection actions.

• Education & Credentials

Mr. Arbulu earned his LL.M. in Taxation from NYU Law School, his J.D. from the University of Detroit Mercy School of Law, an MBA from the Thunderbird School of International Management, and a Doctor of Business Administration (DBA) from Case Western Reserve University, Weatherhead School of Management. This exceptionally rare combination of advanced legal and business education—encompassing tax law, international commerce, and organizational management—positions him uniquely to analyze the corporate, personal, and financial dimensions of IRS collection actions against business owners.

• Recognition & Leadership

Mr. Arbulu is widely regarded as a nationally recognized expert in IRS collection defense and tax controversies, with a documented track record of securing favorable resolutions in high-stakes disputes. His strategic approach to payroll tax liability—one of the most aggressive collection targets pursued by the IRS against business owners—is informed by his deep technical knowledge of trust fund recovery penalty assessments and responsible person determinations. He has successfully represented hundreds of clients in complex scenarios where corporate tax debt has evolved into personal liability exposure, and he is a sought-after advisor on the personal financial consequences business owners face when their company’s tax obligations become their own.

• Professional Involvement

Mr. Arbulu maintains active memberships in the State Bar of Michigan and the Hispanic Bar Association of Michigan, reflecting his commitment to professional excellence, continuing legal education, and leadership in his field. His involvement in professional associations underscores his ongoing engagement with evolving IRS procedures, regulatory changes, and emerging tax controversies affecting business owners and closely held enterprises.

• Experience

Throughout his career, Mr. Arbulu has developed specialized expertise in the full spectrum of IRS disputes that put business owners at personal financial risk. His practice focuses on tax debt relief strategies, IRS audit representation and appeals, tax litigation and Tax Court proceedings, criminal tax defense, and state-level tax controversies. He has litigated and negotiated resolutions in matters involving trust fund recovery penalties—where the IRS names individual business owners as responsible parties—collection defenses against seizure and levy actions, reasonable cause arguments for penalty abatement, and installment agreements designed to prevent financial ruin. His case experience includes successfully defending business owners in Offers in Compromise that have settled alleged corporate tax liabilities in the hundreds of thousands of dollars for substantially reduced amounts, negotiating compromise settlements with state taxing authorities, and mounting effective defenses in circumstances where owners faced both corporate liability and personal collection actions simultaneously.

Arjan Malushi, JD, Tax Attorney, Criminal Tax Defense Specialist | Ayar Law

Arjan Malushi is a dedicated tax attorney and criminal tax defense specialist with a distinctive and practical understanding of the pressures small business owners face when their companies encounter IRS problems that threaten to become personal liabilities. After spending fifteen years building and operating multiple successful restaurants, he transitioned into law school with direct, lived experience of the operational and financial challenges businesses confront—knowledge

that informs every aspect of his representation of owners facing IRS collection actions, payroll tax exposure, and criminal tax charges.

• Education & Credentials

Mr. Malushi earned his J.D. from Western Michigan University Cooley Law School (2025) and is currently pursuing an LL.M. in Criminal Tax Litigation from Villanova University, reflecting his specialized focus and deep commitment to mastering the intersection of criminal law and tax matters. He holds a B.A. in Criminal Justice and Law Enforcement from Ferris State University. He is admitted to practice in Michigan and is a native speaker of Albanian, fluent in the legal nuances of both English and Albanian languages, serving Michigan’s diverse business communities with cultural and linguistic competence.

• Recognition & Leadership

Mr. Malushi brings a rare combination of courtroom advocacy skills and operational business knowledge to his practice. During law school, he served in the Macomb County Prosecutor’s Office, where he conducted preliminary examinations, handled appellate writing, and gained extensive hands-on trial experience in the criminal justice system. This prosecutorial background—combined with his authentic understanding of small business financial pressures and operational realities—enables him to anticipate the government’s theories and defenses while empathizing with business owners who face charges of willful tax evasion, failure to remit payroll taxes, or criminal tax fraud. His notable case achievements include successfully arguing Innocent Spouse Relief claims on behalf of clients, developing and negotiating Offers in Compromise that settled alleged tax liabilities exceeding $500,000 for nominal amounts, and constructing compelling defenses for individuals facing criminal tax exposure by challenging the government’s burden of proof on the “willfulness” element—a critical distinction in criminal tax prosecutions.

• Professional Involvement

Mr. Malushi is an active member of the State Bar of Michigan and is committed to becoming a recognized leader in tax defense within Michigan’s Albanian-American business community. His professional involvement reflects both his legal expertise and his dedication to expanding access to qualified tax representation among underserved populations, particularly immigrant business owners navigating complex IRS procedures while managing language barriers and cultural differences.

• Experience

Mr. Malushi approaches every tax controversy not as an abstract numbers problem, but as a story—a client’s circumstances, business pressures, and legal vulnerabilities—that must be told effectively to IRS agents, Department of Justice prosecutors, or judges and juries. His practice encompasses criminal tax defense (a critical need for owners facing potential prosecution for willful failure to remit payroll taxes or fraudulent filing), federal tax litigation, trust fund recovery penalty defense (the mechanism through which the IRS holds business owners personally liable for unpaid company payroll taxes), tax audits, and defense of business owners across the full range of IRS collection scenarios.

His experience is grounded in both the legal strategies required to defend business owners in IRS disputes and the operational realities of small business finance. He understands that payroll tax liability often arises not from criminal intent, but from cash flow decisions made by owners struggling to keep their businesses afloat—and he leverages this practical insight to develop defenses based on mistake of fact, reasonable cause, and circumstance. His preparation includes meticulous review of the narratives surrounding tax debt: How did cash flow problems develop? What did the owner know about their filing and payment obligations? What evidence supports or contradicts the IRS’s assertion of willfulness or fraud?

SESSION 1 – When Business Tax Debt Becomes Personal |Arjan Malushi |12:00pm – 1:00pm

This session examines how business tax debt can escalate into personal financial exposure and how counsel should assess and respond to collection activity. Topics include identifying the underlying debt, building the initial case file, evaluating collection posture and urgency, federal tax liens, levies and cashflow disruption, revenue officer relationships, Form 433-B financial disclosures, and the importance of current compliance. Attendees will also address installment agreements, Offers in Compromise, currently not collectible status, and the implications of business closure, insolvency, and bankruptcy. The session provides a practical framework for evaluating available collection alternatives and protecting the taxpayer’s interests.

The session also explores procedural and defensive tools available during federal tax collection. Topics include Collection Due Process hearings, Equivalent Hearings, CAP remedies, penalty relief, correcting inaccurate balances, third-party payment risks, and key collection cases. Through a hypothetical involving an operating contractor, attendees will examine how these principles apply in practice and how counsel can organize a defense strategy from the initial IRS contact through resolution. The program also addresses 2026 collection-practice updates and emphasizes practical decision-making, documentation, deadlines, and communication with revenue officers when developing an effective response to business tax liabilities that may threaten operations and personal assets.

BREAK | 1:00pm – 1:10pm

SESSION 2 – Personal Exposure for Unpaid Payroll Taxes: Federal TFRP and State Officer Liability | Agustin Arbulu |1:10pm – 2:10pm

When a struggling business stops remitting withheld taxes, the exposure does not stop at the entity. This session approaches the problem from the owner’s side of the desk: the cash-flow decisions that create trust fund liability, and how those decisions are later reconstructed by the IRS and state revenue departments. Topics include the two statutes of limitation that govern assessment and collection, the difference between federal and state definitions of a responsible person, and why a bookkeeper, lender, or outside accountant can be swept in alongside the owner.

The second half turns to strategy after the IRS or state has made contact. Attendees will examine how to prepare a client for the Form 4180 interview without creating damaging admissions, when to concede responsibility and fight willfulness instead, and how to evaluate the divided-tax refund suit as an alternative to Appeals. The session also covers what happens once the penalty is assessed against the individual: nondischargeability in bankruptcy, personal Offers in Compromise, contribution claims against co-responsible persons under § 6672(d), and coordinating a federal TFRP with a parallel state officerliability assessment so the client is not paying twice for the same period.