There are two statutory components that must be established under IRC section 6672(a) before a person can be held liable for the TFRP.
IRC section 6672 requires significant control over the business' financial operations and the ability to decide which creditors will and will not be paid; therefore, if a person's financial authority is circumscribed by, for example, a senior officer who has the final say on which creditors will be paid, TFRP liability will not apply.
A responsible person may be subject to the TFRP if it can be shown he or she willfully failed to pay the trust fund taxes due.
Since the TFRP is assessed personally against a responsible individual, the liability protection offered by an LLC does not apply.
Recommendation: To ensure that TFRP payments are always and accurately credited to all related parties when received, the Commissioner of IRS should direct the appropriate IRS officials to develop procedures to analyze the results of the quarterly reviews so that specific factors causing the errors are identified.
Recommendation: To ensure that TFRP payments are always and accurately credited to all related parties when received, the Commissioner of IRS should direct the appropriate IRS officials to develop procedures to address the factors causing errors in the processing of TFRP payment transactions identified through the analyses of the quarterly review results.
1992), the threat of being personally liable for the TFRP prevents other potentially responsible pesons at other businesses from misusing the trust fund taxes.
If this newly responsible person pays other creditors instead of the IRS from funds that the business acquires after the person assumes responsibility, he or she is not liable for the TFRP (Slodov, 436 U.
Where applicable, IRC section 6672(e) exempts voluntary board members of tax-exempt organizations from being subject to the TFRP
Since the TFRP
is civil, the IRS may treat individuals as "guilty until proven innocent.
In addition to CDP, CAP and OIC, the Office of Appeals previously considered (and continues to hear) other types of collection-related issues, such as TFRP
, PENAP and jeopardy levies.
This civil penalty, previously known as the 100% penalty, is now called the TFRP