The IRS has broad discretion to allocate partial payments of back taxes. They will do so to its own advantage unless you state how to apply the payment. Shocking that they look at their best intrests and not yours.
This court case, a firm owed income and payroll taxes to the Revenue Service. The agency also asserted the 100% trust fund penalty against the company’s owner for willfully failing to deposit the withheld taxes. In the Tax Court’s view, the IRS did not abuse its discretion when it applied tax payments made by the business to the firm’s income tax debt instead of to the payroll tax bill, keeping the owner liable for a larger amount of payroll taxes.
So please, when sending in payments please send notification of where to apply the payments. Also please remember that the payroll trust funds owed should always be the first payment made. Those debts don’t go away easily.
Concert Staging Services, TC Memo. 2011-231