Trust Fund Recovery Penalty (TFRP)

Trust Fund Recovery Penalty (TFRP): Protecting Business Owners from Personal Liability

Facing an IRS Trust Fund Recovery Penalty? Michelle Turpin P.C. defends individuals against personal liability and protects assets from aggressive IRS collection. The TFRP is one of the most powerful and damaging tools in the IRS's collection arsenal.

What Is the Trust Fund Recovery Penalty?

The Trust Fund Recovery Penalty (TFRP) is equal to 100% of the unpaid trust fund portion of your business's payroll taxes — the employee income tax withheld plus the employee's share of Social Security and Medicare taxes. This penalty is assessed personally against individuals who were "responsible persons" who willfully failed to ensure that these taxes were paid over to the IRS.

Who Can Be Held Personally Liable?

The IRS can assess the TFRP against any person who:

1. Was a responsible person — someone with authority to pay company bills or sign checks, including owners, officers, directors, employees with financial authority, and even some outside bookkeepers and accountants
2. Willfully failed to pay — meaning they were aware of the unpaid taxes and either paid other creditors instead or simply failed to ensure payment

The IRS can assess the TFRP against multiple responsible persons for the same underlying liability. A $100,000 TFRP liability could be assessed against three different individuals — and the IRS can collect up to $100,000 total from all of them combined.

How the TFRP Investigation Works

When a business has unpaid payroll taxes, the IRS assigns a Revenue Officer to investigate. The Revenue Officer will conduct interviews, review financial records, and determine who should be assessed with the TFRP. You are entitled to representation during this investigation and you should never speak with a Revenue Officer without an attorney present.

Defenses Against the TFRP

Our attorneys analyze every aspect of your case to identify applicable defenses:

• •You were not a "responsible person" during the relevant period
• •Your failure to pay was not "willful" under the legal standard
• •The underlying tax liability calculation is incorrect
• •The TFRP was not assessed within the applicable statute of limitations
• •You should be indemnified by another responsible person

Contact Us Immediately

If you have received a Letter 1153 (Notice of Proposed Assessment of Trust Fund Recovery Penalty), you have 60 days to respond. Do not ignore this letter — call Michelle Turpin P.C. immediately at (801) 685-0552.

This content is provided for informational purposes only and does not constitute legal advice.