Trust Fund Recovery Penalty
Defend Against Personal Liability for Your Business's Unpaid Payroll Taxes
The Trust Fund Recovery Penalty (TFRP) is one of the most powerful and feared tools in the IRS arsenal. It allows the IRS to bypass a business entity entirely and assess the full amount of unpaid employee payroll taxes directly against individual business owners, officers, and sometimes even bookkeepers — personally. This assessment cannot be discharged in bankruptcy and survives business closure. If you have received Letter 1153 or a Revenue Officer is investigating your business's payroll taxes, you need experienced representation immediately.
What Is the Trust Fund Recovery Penalty?
The Trust Fund Recovery Penalty (TFRP) is authorized under Internal Revenue Code Section 6672. It allows the IRS to hold individuals personally responsible for the "trust fund" portion of unpaid payroll taxes — the amounts withheld from employees' paychecks for federal income tax, Social Security, and Medicare. The IRS must prove two things to assess the TFRP: (1) the individual was a "responsible person" — meaning they had the authority and duty to collect and pay over taxes, and (2) the failure to pay was "willful" — meaning they were aware of the unpaid taxes and chose to pay other creditors instead. The TFRP equals 100% of the unpaid trust fund taxes and can be assessed against multiple individuals simultaneously.
How It Works
Immediate Representation
As soon as you receive IRS Letter 1153 or a Revenue Officer contacts you, we step in as your power of attorney — you do not speak to the IRS directly.
Responsible Person Interview
The IRS conducts interviews (Form 4180) to determine who qualifies as a "responsible person." We prepare you thoroughly and attend all interviews to protect your rights.
Challenge the Assessment
We challenge the IRS's determination of responsibility and willfulness, present evidence of your limited authority or lack of awareness, and appeal incorrect assessments.
Protest & Appeals
If the IRS proposes the TFRP, you have 60 days to protest. We file a formal protest to the IRS Office of Appeals and argue your case aggressively.
Resolution & Payment Plan
If some liability is established, we negotiate installment agreements, OICs, or CNC status to resolve the TFRP at the lowest possible amount over the longest possible period.
Who Should Consider This?
- ✓Business owners who received IRS Letter 1153 proposing a TFRP
- ✓Officers, directors, or managers of companies with unpaid 941 taxes
- ✓Individuals who signed checks, managed payroll, or had financial control
- ✓Former employees of companies that failed to remit payroll taxes
- ✓Individuals named in a Revenue Officer investigation
- ✓Anyone contacted by the IRS regarding personal liability for business tax debts
Key Benefits
Challenge Responsibility
Not everyone with a title is a "responsible person." We aggressively challenge unfair TFRP assessments.
Limit Liability
Even if some liability exists, we work to reduce the amount, secure favorable payment terms, and prevent liens and levies.
Prevent Liens & Seizures
A TFRP assessment can result in personal liens and levies. We move quickly to prevent these before they happen.
Document Your Case
Proper documentation of your role, authority, and actions can be the difference between a full assessment and no liability.
Ready to Resolve Your Trust Fund Recovery Penalty Issue?
Free consultation. No obligation. A licensed tax attorney will call you within 5 minutes.
Frequently Asked Questions
Can multiple people be assessed the TFRP for the same unpaid taxes?+
Yes. The IRS can assess the full TFRP against multiple responsible parties. However, the total collected cannot exceed the actual unpaid trust fund taxes — payments by one responsible party reduce the liability of others.
I was just a bookkeeper — can I be held personally liable?+
It depends on your authority. Bookkeepers who had check-signing authority or decision-making power over which bills to pay can be assessed. Those who simply processed payroll without independent authority generally cannot. We assess your specific situation carefully.
Can TFRP liability be discharged in bankruptcy?+
No. Trust Fund Recovery Penalties are not dischargeable in bankruptcy — they survive the process and continue to be owed to the IRS afterward.
What is the deadline to respond to Letter 1153?+
You have 60 days from the date of the letter to protest the proposed assessment. Missing this deadline results in automatic assessment. Contact us immediately upon receiving this letter.
Related Services
Payroll Tax Problems
Resolve delinquent payroll taxes, prevent business closure, and protect yourself from personal liability through the Trust Fund Recovery Penalty.
Installment Agreement
Establish a formal monthly payment plan with the IRS to satisfy your tax debt over time and stop collection actions.
Offer in Compromise
A government-approved program that lets qualifying taxpayers settle their IRS debt for a fraction of the full amount.