The Trust Fund Recovery Penalty (TFRP)

Businesses that withhold taxes from employees and others but don’t pay them over to the IRS may face a penalty equal to 100% of the unpaid tax. The Trust Fund Recovery Penalty (TFRP) can be assessed personally against “responsible” parties, even non-owners. When the treasurer of an airline-related business was hit with the TFRP on the company’s unpaid taxes, he asked the U.S. Court of Federal Claims to intervene. He stated he was a “cash manager,” without authority to decide which bills to pay, including tax payments. After finding he “had authority to make payments up to $10,000,” to recommend payments, write checks and pay taxes, the court allowed the case to proceed. (Rosenheim, 5/3/22)

Posted May 17, 2022