Trust Fund Recovery Penalty

IRC §6672

The Trust Fund Recovery Penalty (TFRP) is a penalty against any responsible person required to collect, account for, and pay over taxes held in trust who willfully fails to perform any of the activities. The TFRP may be imposed for:

The TFRP basically imposes a personal assessment equal to 100% of the employment tax that was withheld and not paid, or that should have been withheld. Thus the business is remains liable for the employment taxes but so does the individual(s) for which a Trust Fund Recover Penalty has been assessed. Thus the IRS may reach the business assets or the individual(s) assets to satisfy the liability. Trust Fund Recovery Penalties are not dischargeable in bankruptcy.

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