Megan $($chair of the board of directors$)$ and Matthew $($company president$)$ each own $50\%$ of Denver Manufacturing Company. Denver Manufacturing Company is experiencing difficult financial times. In fact, last month, Megan used $$550,000$ of payroll taxes and income withheld from employee paychecks to pay a creditor that threatened to cut off supplies.

Megan willfully used these government funds for the operations of the business, but it was not enough. The company missed the next two payrolls, and today, other creditors took action to shut down Denver Manufacturing Company altogether.

Address the following matters in a memo for the tax research file:

How much will the IRS assess in taxes and penalties in this matter and from whom?

How can you, as a tax professional, best offer service to Megan and Matthew?