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.
An IRS revenue officer begins the process of assessing the TFRP with an investigation to determine which individuals were responsible and willful.
The actual collection of the TFRP begins with Letter 1153(DO) and Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, notifying the individual that there will soon be a demand for payment of the TFRP.
Generally, assuming Forms 941, Employer's Quarterly Federal Tax Return, or comparable returns were timely filed, the IRS has three years to assess the TFRP from the April 15 that succeeded the return's due date (IRM [section]5.
The individual against whom the TFRP is assessed should note that the IRS applies payments in its best interest.
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.
The first of two tests for applying the TFRP involves identifying those who are responsible persons.
The IRS will not recommend assessment of the TFRP until it has sufficient information to support the position that someone is a responsible person, unless he or she intentionally impedes the investigation by the IRS.
The TFRP is not imposed on volunteer, unpaid members of a board of trustees or directors of tax-exempt organizations if they serve solely in an honorary capacity, do not participate in day-to-day operations and do not know about a failure to pay withholding taxes.
The TFRP extends personal liability to corporate owners, officers, employees and other responsible persons.
The ability to hire and fire employees, the authority to disburse funds (as distinguished from the authorization to sign checks) and the holding of a corporate office are viewed by all of the circuits above as important indicators of liability for the TFRP.
A person who has apparent (but not actual) authority is at-risk for a TFRP assessment.