Trust Fund Recovery Penalties

Failing to timely pay over payroll taxes can result in significant penalties and interest, sometimes in excess of the initial tax that wasn’t paid.  The Internal Revenue Code gives the IRS broad powers with regard to unpaid payroll tax liabilities.  As a result, the IRS is particularly aggressive in pursuing businesses for unpaid payroll taxes. The government may be able to pursue the business owner personally for the business’s unpaid payroll tax liabilities.

This is done by assessing the “trust fund recovery penalty” against a “responsible party”.  Trust fund taxes are the income and social security taxes an employer withholds from the wages of employees.   Although corporate officers, directors, stockholders and employees are normally protected from personal liability for the debts of their corporations, the IRS can assess personal liability against the so-called “responsible persons”.

Getting an experienced IRS tax attorney on your side is extremely important.  Often the IRS asserts the penalty against not only the owners of the business, but its accountants, bookkeepers, clerical staff, and anyone who signed checks or had the authority to sign checks.  As former IRS attorneys, we know how the IRS investigates this type of cases and what arguments they rely on in assessing trust fund recovery penalties. If you are threatened by the IRS with a trust fund recovery penalty, of if the trust fund recovery penalty was assessed against you, call our tax lawyers to evaluate your case.