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A: To encourage prompt payment of withheld employment taxes and collected excise taxes, Congress passed a law that provides for the Trust Fund Recovery Penalty (These taxes are called Trust Fund taxes because the employer actually holds the employee's withheld taxes or the collected excise taxes in trust until the employer makes a federal tax deposit in the amount of the withheld or collected taxes).
If the IRS plans to assess you for the trust fund recovery penalty, they will send you a letter stating that you are a responsible person. You have 10 days after they send their letter to tell them why you disagree and 60 days after they send their letter to appeal their proposed assessment to the IRS Office of Appeals. If you do not respond to their letter, they will assess the penalty against you and send you a Notice and Demand for Payment. The IRS may assess this penalty against a responsible person whether or not the company is still in business.
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