The IRS Means Business: Trust Fund Recovery Penalty

Tighe, Kress & Orr.

By: Tighe, Kress & Orr.

The IRS means business. If employers withhold tax from employee paychecks but fail to pay that amount over to the IRS, the penalty (called the Trust Fund Recovery Penalty) is 100% of the unpaid tax, and can be assessed personally against responsible persons. When one law firm’s three equal shareholders failed to pay the tax, they argued that the president/shareholder had “deep-seated control.” Even so, a U.S. District Court ruled all of the shareholders had the ability to oversee the finances, and it upheld the penalty against them. (Spizz, 120 AFTR 2d 2017-5550)

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