The IRS may assess the penalty against anyone: who is responsible for collecting and paying withheld income and employment taxes, or for paying collected excise taxes, and who willfully fails to collect and pay them. Willfulness exists if the responsible person: knew about the unpaid taxes, and used the withheld or collected funds to keep the business going, allowed available funds to be paid to other creditors other than the IRS, or otherwise failed to pay over the taxes to the IRS. In addition to these civil penalties and remedies, there are possible criminal ones as well.
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Elden Sodowsky provides answers for the most frequently asked questions by clients.

 


Q: Who may be liable for the Trust Fund Recovery Penalty?

A: The IRS may assess the penalty against anyone:

  • who is responsible for collecting and paying withheld income and employment taxes, or for paying collected excise taxes, and
  • who willfully fails to collect and pay them.
Willfulness exists if the responsible person:
  • knew about the unpaid taxes, and
  • used the withheld or collected funds to keep the business going, allowed available funds to be paid to other creditors other than the IRS, or otherwise failed to pay over the taxes to the IRS.
In addition to these civil penalties and remedies, there are possible criminal ones as well.


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