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Trust Fund Recovery Penalty

Trust Fund Recovery Penalty

The Trust Fund Recovery Penalty (TFRP) is imposed for failure by businesses to hand over certain taxes to the tax authorities. The most common examples include the employee portion of payroll taxes and excise taxes. The penalty is among the largest imposed by the IRS at 100% of the trust fund portion of unpaid tax.  Individuals responsible for the TFRP can include not only officers and directors of a company but also employees who are often unaware of the potential risk when carrying out their job duties. Taxpayers targeted by a Trust Fund Recovery Penalty (TFRP) investigation can benefit from a tax practitioner defending their position and may be able to prove that the taxpayer was not a responsible party. In the event a Trust Fund Recovery Penalty (TFRP) has been assessed, there are strategies to challenge the assessment or to settle the penalty.