Employers that withhold taxes from wages but don’t pay them over to the IRS may face a penalty of 100% of the unpaid tax. The Trust Fund Recovery Penalty (TFRP) can be assessed personally against “responsible” parties. In one case, a corporation owner’s daughter/corporate officer was assessed a TFRP of $680,472 for unpaid payroll taxes. She argued that she wasn’t a responsible party. She owned no stock and lacked the power to hire and fire employees. But she did have the power to write checks and pay vendors and was aware of the unpaid taxes. A U.S. Appeals Court found the “great weight of evidence” indicated she was a responsible party and the TFRP was upheld. (Scott, CA 11, 10/31/22)
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