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Shareholders, Officers, and certain employees can be held personally liable for a corporation’s failure to pay certain payroll taxes (the same can be true with persons involved with an L.L.C. or other type of business entity). Internal Revenue Code Section 6672 authorizes the IRS to assess personal liability against individuals who were “willful and responsible” for a business entity’s trust taxes that were “evaded, or not collected, or not accounted for and paid over.” This means that you, or anyone within your business, that the IRS determines to be willful and responsible for the corporation’s (or other entity’s) failure to pay certain taxes could be held personally liable.
Once the IRS has made a personal Trust Fund Recovery Penalty assessment against an individual, the IRS may begin to collect from that individual in addition to its collection efforts aimed at the underlying business entity. Thus, your individual assets, wages, and bank accounts are put into jeopardy.
At Fortress, we understand how important it is to protect your individual assets, wages, and bank accounts. Without them, it can be difficult, if not impossible, to provide the basics for yourself and your family. Therefore, we take Trust Fund Recovery Penalties very seriously.
The best way to resolve a Trust Fund Recovery Penalty is to avoid having it assessed in the first place. If a tax problem is caught early enough, we can oftentimes negotiate an agreement with the IRS whereby your business resolves its own liability. However, the longer your tax problem goes unresolved, the greater the chances that the IRS will look to you and whoever else they determine to be responsible for your company’s failure to pay taxes.
In the event that you have already been personally assessed or it is too late to prevent a personal assessment, immediate action is necessary. We are oftentimes able to convince the IRS not to touch your personal assets, wages, and bank accounts as long as an acceptable agreement on behalf of your company is negotiated quickly.
If the IRS has already assessed you personally and has begun taking enforcement against your personal assets, wages, and/or bank accounts, you are probably well aware of the serious trouble that you have found. If you have reached this stage, we can intervene immediately and work towards the reversal of any current enforcement actions. Assuming that you do not wish to use personal income and assets for the purpose of satisfying the unpaid trust taxes, we can promptly begin negotiations toward an agreement whereby the associated business entity resolves the liability on its own with favorable terms.
Before your situation relative to the Trust Fund Recovery Penalty worsens, we strongly recommend that you CALL US TODAY FOR A FREE CONFIDENTIAL CONSULTATION at 1-877-777-7430.
Resolving your tax debt typically has very little to do with accounting, and everything to do with building and presenting a strong case.
Most CPA’s have very little experience, if any, resolving back taxes. Our attorneys do nothing but resolve back taxes, day in and day out.
Negotiation and persuasive skills, not number-crunching skills, get the best results when it comes to resolving back taxes.
Summary The Trust Fund Recovery Penalty holds responsible individuals personally liable for unpaid employment taxes. It applies when the IRS proves willful failure to pay employment taxes, not due to accidental mistakes. Recent IRS updates (2025) streamline the assessment process but emphasize strict accountability. TFRP can lead to wage garnishments, bank levies, and asset seizures,
Are you an owner or employee of a business that is delinquent with employment taxes? If so, watch out! It is possible that you will be held personally liable for what is called the Trust Fund Recovery Penalty. What is the Trust Fund Recovery Penalty? In short, the Trust Fund Recovery Penalty is a penalty
Key Takeaways Businesses can settle IRS tax debt for less than the full amount through an In-Business Offer in Compromise (OIC) if the IRS determines the full balance cannot realistically be collected. IRS approval requires full compliance first, including filing all tax returns, staying current on payroll tax deposits, and resolving any Trust Fund Recovery
