What Is The Trust Fund Recovery Penalty?

A company that has employees is responsible for collecting the taxes from its employees (withholdings) and paying those taxes over to the United States. Under Section 6672 of the federal tax code, when the company has failed to pay over those taxes, a penalty – known as the “Trust Fund Recovery Penalty” – may be assessed against the individuals in the company responsible for that failure. The penalty against a “responsible person” is equal to 100 percent of the taxes that were stated as withheld from the wages of the employees but which were not paid over to the IRS.

The […]