Trust Fund Recovery Penalty (100 percent Penalty) Defenses

Under Section 6672 of the Internal Revenue Code, when a company fails to pay employment and unemployment taxes, the IRS can assess a penalty against those person(s) responsible for collecting the taxes at the company and pay them over to the United States. The penalty is called the Trust Fund Recovery Penalty.

Often, taxpayers mistakenly believe that their Section 6672 tax liability is a liability owed only by the company, which incurred the delinquent tax accruals. However, this penalty is in fact a personal tax liability. The law makes clear that the Section 6672 liability is not extinguished by the fact that the withheld taxes are not merely a debt of the employer.

There are several available defenses which can be used to oppose the assessment of a Trust Fund Recovery Penalty. If your company is incurring payroll tax liabilities or if you are faced with a proposed assessment of a Trust Fund Recovery Penalty, contact this office to discuss and determine available defenses.

Even if you have already been assessed the Trust Fund Recovery Penalty, we will analyze, and file if appropriate, a request for abatement and prove that you were not a “responsible person”.

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