Trust Fund Recovery Penalty

The Trust Fund Recovery Penalty (the 100% penalty) is authorized under section 6672 of the Internal Revenue Code and provides this general rule:

Any person required to collect, truthfully account for, and pay over any tax imposed by this title and willfully fails to collect such tax, truthfully account for and pay over such tax, willfully attempts to evade or defeat this tax or the payment of it, shall be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

The IRS moves quickly to enforce this penalty against employees, officers and directors of companies failing to deposit withholding taxes. Because of the expansive interpretation by the IRS of section 6672 many people have been surprised by the assertion of this penalty. The IRS must find you to be both a “responsible person” and to have “willfully” failed to deposit the taxes. Although there is a difference of interpretation by the federal courts on the application of and definition of both terms they also use a broad interpretation and uphold collecting the penalty from unsuspecting people. If you have any indication your company is not paying its employee taxes move immediately to protect yourself.

We will be happy to analyze your circumstances and advise you on the best course of action. We have been successful in negotiating at the corporate level and avoiding personal assessment of these taxes and successful at the individual level avoiding assessment and securing a long term payout or Offer In Compromise.

In the event you worry about TFRP liability e-mail us at gcoulter@gctaxlawyer.com, or contact us by going to and completing the Assistance Form, or call us at one of our phone numbers 1.888.5TAXLAW or 706.546.9755 or fax us at 706.546.1796.

A power of attorney is necessary for us to represent you before the IRS. You may download IRS Form 2848 and send it to us by completing lines 1 and 3, and executing it on line 9. Fax the form to us and mail the original.

Once we analyze your situation and you agree for us to represent you we will send you an engagement letter by E-mail, fax or mail as you direct. When this is returned we will immediately start on your case.

See our Client Forms and Contact Us pages for further information.