I have received a document that states the IRS is proposing to assess the trust fund penalty against me. What does this mean?

The trust fund penalty may be assessed against persons who are “willful or responsible” with regards to the non-payment of employment taxes, usually for a corporation, LLC or partnership. If you have received this notice, you only have a short time to file an appeal and protest the proposed assessment. Failing to respond can mean that you will be assessed a very large tax, which can lead to liens and levies. This is a very serious matter and should be handled with care.

Trust fund taxes are the amounts of money that are held out of an employee’s pay for payment of that employee’s income tax, social security, and Medicare. These amounts are required to be sent to the IRS, along with the company’s payment of its share of social security and Medicare. Failing to pay/deposit these amounts as required may cause the IRS to seek payment from individuals connected with the Company.

Trust fund penalties have been assessed against officers, accountants, lawyers, bookkeepers and even secretaries. Trust fund penalties may be assessed against multiple individuals for a single amount owed. The IRS is notorious for throwing out a wide net which catches many persons who are probably not legally responsible for the trust fund penalty. That is why it is vitally important to file an appropriate appeal within the deadlines prescribed. Trust fund taxes are never dischargeable in bankruptcy. We represent many individuals who have been caught up in this net.