Trust Fund Recovery Penalty: Defending Your Clients in IRS Enforcement Actions

When a company or organization fails to pay collected or withheld taxes, the IRS may impose a trust fund recovery penalty (TFRP), which requires the employer to hold the employee’s money in trust until a federal tax deposit can be made. When the IRS can’t immediately collect the unpaid trust fund taxes from the company, the TRFP can be assessed against those at the company who are responsible for withholding income and employment taxes, according to the IRS. Employees or officers who direct the collecting, accounting and payment of trust fund taxes are personally vulnerable to TFRP enforcement and fines by the IRS. 

During this session, tax attorney Robert E. McKenzie will cover the rules for assertion of the TFRP and the tax or legal professional’s role in defending a person who is potentially liable. Learn how to help your clients properly collect, account for and pay income and employment taxes to the IRS on time, and how to keep them out of hot water should a mistake lead to IRS enforcement of the TFRP.

Session Highlights

• Basis for assertion of the TFRP
• Responsibility defined
• Willfulness defined
• Collectability determinations
• IRS investigative techniques
• The interview form and its dangers
• Computation of the TFRP
• Assertion against multiple persons
• Defense tactics – ways to assist your client
• Appeal rights

NASBA & IRS Category of Study: Taxes

Level: Basic

Who Should Attend

• Certified Public Accountants (CPAs)
• Enrolled Agents (EAs)
• Finance and Accounting Professionals
• Accounting and Taxation Firms
• Law firms dealing with tax issues