Trust Fund Recovery Penalty

Taxpayers can be held personally liable for certain unpaid federal employment taxes through the Trust Fund Recovery Penalty ("TFRP"). Section 6672 of the Tax Code authorizes the IRS to assess the penalty against any taxpayer who: (1) is responsible for collecting or paying employment taxes; and (2) willfully fails to collect or pay the employment taxes.

Prior to assessing the TFRP, the IRS initiates a TFRP investigation. Through this investigation, the IRS interviews individuals associated with the business to determine whether they may be subject to the penalty. If the IRS determines that the TFRP penalty applies, a proposed assessment will be issued against the taxpayer. The taxpayer has 30 days to file an administrative appeal to challenge the proposed assessment. If the appeal is not successful, the taxpayer can only further challenge the assessment by paying a portion of the tax and suing for a refund in federal district court or the U.S. Court of Federal Claims. IRS Publication 784 summarizes the TFRP process.

Our tax attorneys are experienced in representing taxpayers facing the Trust Fund Recovery Penalty. We invite you to contact us to schedule a consultation with a tax attorney who can evaluate your case.

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We are committed to delivering results for our clients. We invite you to review a sample of Audit Reconsideration cases that we have successfully resolved for our clients. All cases are different and the summaries below should not be interpreted as a prediction or guarantee of success or specific results.

$5.7 Million Trust Fund Recovery Penalty Reversed

The IRS proposed a Trust Fund Recovery Penalty assessment of $5.7 million against the Taxpayer. DeWitt Law represented the Taxpayer before the IRS and filed an administrative appeal. The assessment was reversed.


No Trust Fund Recovery Penalty Assessment After Investigation

The IRS initiated a Trust Fund Recovery Penalty investigation against the Taxpayer, who was the CFO for a company with outstanding federal payroll tax debt. DeWitt Law represented the Taxpayer before the IRS to defend against assessment of the penalty, arguing that the Taxpayer was not a responsible party. The investigation was closed with no Trust Fund Recovery Penalty assessment against the Taxpayer.

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Tyler H. DeWitt, Esq., CPA
Managing Attorney

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