Trust Fund Recovery Penalty
Employers have a legal obligation to withhold certain taxes from their [W2] employees’ gross pay and hold them, in trust, for remittance to the tax authorities. These taxes include federal income tax and FICA withholdings (i.e. social security and medicare contributions).
When these funds are not paid to the IRS, they look for all responsible and/or willful persons to hold responsible for trust fund tax evasion. Those found responsible can be held personally liable for paying the company’s trust fund portion of the tax debt, even if they are not the owner of the business.
The IRS has three-years from the filing of your payroll tax returns to assess trust fund penalties and they have ten-years to try to collect it from you.
With a trust fund recovery penalty being, arguably, an employer’s worst nightmare, you can’t afford to ignore this or work with a professional who doesn’t have an expertise in this area. Our primary strategy is proving that you were not a responsible and/or willful party to any attempt at trust fund tax evasion.
It is important to know that the IRS will hold someone responsible. However, our goal is to eliminate your personal burden or help you navigate an affordable, non-invasive resolution, if it is determined that you are the responsible party.
You cannot afford to do anything other than be proactive and working with an experienced professional is your best first step.