Trust Fund Recovery Penalty — Defend Against Personal Liability
The Trust Fund Recovery Penalty (TFRP) is one of the most powerful tools the IRS has against business owners. It holds individuals personally liable for payroll taxes their business failed to deposit — regardless of the business structure.
How the IRS Handles This
IRS Revenue Officers interview all potential responsible parties using Form 4180. After investigation, the IRS issues Letter 1153 proposing the TFRP. You have 60 days to contest it.
DIY Steps to Resolve This
- 1
Respond carefully to Form 4180 — do not admit responsibility without review
- 2
Gather evidence of your actual duties and financial authority
- 3
Contest the TFRP within 60 days of Letter 1153
- 4
Request a conference with the IRS manager to present your defense
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