Trust Fund Recovery Penalty (TFRP) | Rue & Associates

Trust Fund Recovery Penalty

If you’re a business owner, you have more concerns about taxes than the average taxpayer. With the exception of income taxes and local taxes, business taxpayers pay federal excise taxes as well as Social Security taxes that are referred to as trust fund taxes. They are called trust fund taxes because the money is held in a trust until it is paid as a federal tax deposit.  Subsequently, if these deposits go unpaid, there is a Trust Fund Recovery Penalty (TFRP).

TFRP applies to business owners and principals in a role of responsibility for tax payments such as corporate officers and directors, payroll service providers, and professional employer organizations (PEOs) among others outlined by the IRS. This penalty can be assessed if any of these parties are responsible for timely payment of collected excise taxes and/or withheld payroll taxes and willfully failed to collect or pay them. This is usually caused by disregarding payroll tax obligations. However, even if you had the best intentions to comply with the laws regarding excise and payroll taxes, it’s still possible to be hit with TFRP. If your business is having trouble paying its bills, using available funds for other purposes instead of outstanding trust fund taxes is construed as willfulness.

If you have received a notice that the IRS will assess TFRP against you, Rue & Associates’ experienced tax professionals are here to assist you with appealing TFRP decisions and helping configure the correct amount. We are also available year-round to take care of your quarterly obligations as an employer to ensure federal trust fund tax deposits are calculated properly and paid on time. Payroll tax matters are time-consuming and stressful, and you’ve got a business to run: your trust fund taxes are in good hands and we will always go the extra mile when negotiating appeals and settlements with the IRS.

Please contact us today to speak to one of our friendly and professional tax law experts.