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Employment Tax Disputes

Trust Fund Recovery Penalties

 

PROTECTING YOUR BUSINESS

At Thorn Law Group, we have extensive experience representing business owners in audits and disputes with the IRS over the withholding and payment of payroll taxes. 

Withholding taxes are the income and social security taxes an employer withholds from the wages of its employees.  They are commonly referred to as "trust fund" taxes because they are held in trust by the employer until it pays over that amount to the government. 

The IRS can assess a Trust Fund Recovery Penalty (“TFRP”) against any individual taxpayer who fails to promptly pay withheld income and employment taxes that cannot be immediately collected from the business.  Specifically, any person who is responsible for withholding, accounting for, or depositing or paying these taxes and who willfully fails to do so can be held personally liable for a penalty equal to the full amount of the unpaid tax, plus interest. A “responsible person” for this purpose can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business if he or she has control over the disbursement of funds.  A trustee or agent with authority over the funds of the business can also be held responsible for the penalty.  The amount of the TFRP is 100 percent of the total unpaid taxes.

The IRS is very aggressive in pursuing unpaid payroll taxes.  In addition to the Trust Fund Recovery Penalty, the government is quite willing to criminally prosecute those who willfully fail to file payroll tax returns, or to pay payroll taxes.

If you are the potential target of an IRS assessment of the Trust Fund Recovery Penalty, or have been notified by the IRS that you will be interviewed in connection with the TFRP, contact Thorn Law Group so we can explore your options with you. 

To view the IRS policies on trust fund taxes and the trust fund recovery penalty, visit:
IRS Summary of trust fund taxes
IRS Summary of the Trust Fund Recovery Penalty