Trust Fund Penalty
What is Trust Fund Penalty
A Trust Fund in terms of employment tax should not be mistaken with a trust fund in terms of wealth management. When the IRS refers to a trust fund in terms of a business, they mean the funds recovered from the taxes withheld from employees which the employer is responsible for putting into their federal tax deposit. These are called trust fund taxes because you, the employer hold the money in trust until it is deposited. Trust fund penalty happens when taxes are held.
What is a Trust Fund Recovery Penalty (TRFP)?
Who is Held Responsible for the TRFP?
A responsible person is determined as
Willfulness is determined as:
In essence, anyone responsible for collecting these funds can be held responsible however, employees can be held responsible as well. If you know these payments aren’t being collected you could be held responsible.
How Does the Trust Fund Recovery Penalty Work?
How Much is a Trust Fund Recovery Penalty?
How Do I Avoid a Trust Fund Recovery Penalty?
A Trust Fund Recovery Penalty is often stressful for all responsible parties and businesses involved but there are a number of ways to work this situation out. If you feel you may be liable for TNRP, have received notice that a penalty is being assessed or you just want to make sure that you avoid this all together, we are here to help. Give us a call today to receive a free consultation or visit our IRS problem resolution page for more info.