The IRS imposes the Trust Fund Recovery Penalty (TFRP) on responsible individuals for failing to remit payroll taxes. The Federal Insurance Contribution Act (FICA) has two major components. First is the employer contribution portion, which includes the Old Age, Survivors, Disability Insurance (OASDI)(6.2%) and Medicare (1.45%). The second component is the employee’s share (Trust Fund portion), which includes OASDI (6.2%), Medicare (1.45%), and Federal Income Tax Withholdings. If you are a responsible party, you could be held jointly liable for the entire Trust Fund portion. At Spaulding Legal, APC we take the time to help you understand how the Trust Fund Recovery Penalty applies to your case. From there, we immediately start planning your defense.


Typically, the TFRP comes into play when a business has employees and fails to remit the payroll taxes due. When that happens, the IRS begins protecting its rights as a creditor by assessing the TFRP to all responsible individuals – giving the IRS the ability to pursue more than one party to collect the money owed. You could be on the hook if you were responsible for collecting, accounting for, and paying over trust fund taxes to the IRS and willfully failed to perform those duties. TFRPs typically apply to officers of the company, managers, or employees with sufficient authority. However, it is not uncommon for the IRS to try and assess the TFRP to employees that are not responsible. To protect against the assessment, you need to know the specific rules and procedures that apply to the TFRP.

By understanding how, why, and when TFRPs are assessed, Spaulding Legal, APC can provide a customized strategy to help avoid or remove TFRPs when possible. Additionally, we will ensure you understand your rights as a taxpayer so you can make an informed decision at every stage of your case.


If TFRPs are properly assessed, there are still several ways to deal with them. First, you may be able to reduce the balance due through an offer in compromise (OIC). To learn more about the OIC options available please click here. If an offer in compromise is not a viable option, then you need to negotiate a payment plan that you can afford (or establish a hardship status). Otherwise, the IRS will eventually have the ability to start enforced collection activities (garnishments, levies, seizures, etc.).

At Spaulding Legal, APC we understand how to develop a personalized strategy to resolve your tax debt. The first step is to ensure the TFRP is properly assessed; then we analyze your financial situation to determine what the right course of action is to resolve your issue effectively.