Trust Fund Penalties

Businesses that pay wages to employees are responsible for collecting employment taxes and remitting those funds to the IRS when required.

If those responsible for collecting these taxes fail to do so, or if they willfully choose to pay other debtors in advance of the IRS, the result can be an assessment of a Trust Fund Recovery Penalty, or TFRP.

If you have been sent a letter informing you that a TFRP is being assessed against you, immediate action is required in order to maintain good standing with the IRS.

What Are Trust Fund Penalties?


Trust Fund Penalties, or Trust Fund Recovery Penalties (TFRP) are generally assessed against an individual for certain business tax liabilities, such as employment and excise taxes.

They are called Trust Fund penalties because the IRS considers the unpaid taxes as being withheld by the employer in trust until they are paid to the federal government.

Businesses are required to withhold various types of taxes from their employees and pay the same over to the IRS. When a business fails to do this, the IRS will assess TFRP against the individuals or entities who are responsible and willful in not paying the taxes.


Trust Fund Penalty Information

For employment taxes, the amount of the TFRP is generally the unpaid portion of payroll taxes withheld by the employer from their employees’ wages.

Once a Trust Fund Recovery Penalty has been assessed, the IRS can begin to take collection actions against the responsible individual or entity, including filing tax liens against your property and issuing levies or seizures.

Preventing or Fixing Trust Fund Penalties

The easiest way to prevent a Trust Fund Recovery Penalty is to ensure that all applicable employment taxes are accurately collected and promptly paid to the IRS on-time.

If you or your business is facing the threat of a TFRP, working with a knowledgeable tax expert can result in the fastest, most desirable outcome.

Call us today for a free consultation and to get more information about trust fund penalty problems and relief. The number is (855) 529-3214.