Trust Fund Recovery Penalty

Trust Fund Recovery Penalty

The Trust Fund Recovery Penalty (TFRP) is a civil penalty that is personally assessed against individuals who failed to pay their payroll taxes to the IRS. Under IRS, Sec 6672(a), the IRS can impose this penalty on any individual responsible for paying a company's payroll taxes and failing to do so. Under the event that the TFRP is assessed, the IRS will audit all parties accountable for the unpaid payroll taxes. Once each individual has been personally assessed, the IRS can legally pursue collection action, file tax liens and even initiate a seizure against said individual.


How Lifeback Tax Help
  • your information is secure
  • more details
  • confirm info

Over $750 Million in Tax Debt
Removed for Our Clients!

Lets Resolve Yours Now

My Information

Amount Owed to State (If Any)

Confirm Details

Name:

Amount Owed to IRS:
Amount Owed to State:
Email Address:
Phone Number:
State

Success !





You Have Successfully Signed Up
Client journey process with Lifeback Tax

Why Does The Trust Fund Recovery Penalty Exist?

You may be asking "why does this penalty exist?" Well, the IRS' logic for imposing the TFRP is that the individual responsible for these taxes was holding the funds in trust for the government. Therefore, the IRS will take action against individuals who have failed to manage their business and government duties. Although the business may protect employees from personal liability, the Trust Fund Recovery Penalty can still hold an individual liable if their business fails to remit the mandatory funds.

Who Is Affected By The Trust Fund Recovery Penalty?

It may seem logical that the IRS would simply assess the business itself with the Trust Fund Recovery Penalty for unpaid business taxes. However, the TFRP specifically penalizes the employee who failed to ensure the proper taxes were paid for said company. In order to determine the person who must be penalized, the IRS must determine who is "responsible" for the unpaid payroll taxes and if they neglected said taxes "willingly." These two factors ultimately contribute to the IRS' TFRP assessment on individuals. The IRS Notice 784 is a basic guideline for individuals who believe they may be liable for unpaid federal taxes.

Responsibility

IRC section 6671(b) defines a "responsible person" as a business employee who is responsible for collecting and/ or paying the necessary employment taxes. The IRS takes into consideration the individual's company status and job duties; the party audited for the TFRP must have a substantial amount of power over the business' finances. More specifically, the "responsible" party must be a person or party that has the ability to manage and control the collecting, accounting, and paying of trust fund taxes.

Examples of a "responsible" party include, but are not limited to:

  • - An employee or officer of a corporation
  • - An employee or member of a partnership
  • - A third party payer or alternative corporation
  • - A person with the authority and power to control the disbursement of funds.
  • - Payroll Service Providers (PSP) or Professional Employer Organizations (PEO)

Willfulness

After careful deliberation, the IRS will then investigate the "responsible" party in order to determine their "willfulness." The primary factor in determining "willfulness" is whether the responsible party's decision to not pay the required taxes was conscientious. Additionally, the IRS does not take into consideration if the responsible party's decision was made with malicious intent. Simply put, the responsible individual will be held liable for the missing taxes if they are found guilty of doing so willfully and knowingly.

Examples of "willfulness" may include:

  • - Awareness of outstanding taxes
  • - Intentionally disregarding the law
  • - Indifference to the law
  • - A person with the authority and power to control the disbursement of funds.
  • - Using available funds to pay creditors while unable to pay business employment taxes

Let Lifeback Tax Resolve Your Trust Fund Recovery Penalty!

Individuals faced with the Trust Fund Recovery Penalty face hefty fees as well as the burden of dealing with the IRS. An IRS Revenue officer will be assigned to collect the business' unpaid taxes as well as investigate the responsible party. The TFRP is a headache to deal with, we know!

Lifeback Tax has settled and negotiated TFRP cases for plenty of clients. Our expert staff of Enrolled Agents, CPAs, attorneys and case managers (link to https://lifebacktax.com/blog/how-to-choose-the-best-tax-pro-to-resolve-back-taxes/) have dealt with the multi-faceted tax code for years. We work with both businesses and individuals facing the intimidating Trust Fund Recovery Penalty. Our team understands that the process to resolving the TFRP can be grueling. In order to successfully resolve the TFRP, we exhaust every option possible. Our in-depth knowledge of the tax law and IRS procedures make us confident in knowing we can help our clients resolve the TFRP once and for all!

Frequently Asked Questions About Trust Fund Recovery Penalty

LifeBack Tax

Our team of tax experts is standing by to help you resolve your tax problems!.

Awesome Support

We genuinely want to find the best possible solution for you and with our team on your side, results are optimal!

lifetback ax

Call Now : 1-855-605-1500

Fast and Reliable

The LifeBack team works fast to resolve your problems and with hundreds of satisfied clients, satisfaction is guaranteed!

Free Consultation

Get started on your tax resolution journey today with a 100% free consultation!

Tax resolution specialist Logo

Certified by the American Society of Tax problem Solvers

Our staff is certified by the American Society of Tax Problem Solvers. Look for this when choosing a tax attorney.

ASTPS Logo
CalCPA MEMBER Logo

Member -California Society of Certified Public Accountants

LifeBack Tax Relief is a Member of the California Society of Enrolled Agents. Look for this when choosing a tax relief company.

CalCPA MEMBER Logo
NAEA Logo

Member -National Association of Enrolled Agents

LifeBack Tax Relief is a member of the National Association of Enrolled Agents. Look for this when choosing a tax relief company.

NAEA Member Logo
CSEA Logo

Member -California Society of Enrolled Agents

LifeBack Tax Relief is a Member of the California Society of Enrolled Agents. Look for this when choosing a tax relief company.

California Society of Enrolled Agents Logo
State Bar of California Logo

Member -State Bar of California

LifeBack Tax has members on staff who are licensed with the State Bar of California.

State Bar of California Logo
California Lawyers Association (CLA) Logo

Member -California Lawyers Association (CLA)

LifeBack Tax has staff members who have joined the California Lawyers Association (CLA).

California Lawyers Association (CLA) Logo