Employers that withhold taxes from employee 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, the owner of three masonry companies was assessed a TFRP of $650,000 for failing to pay employment taxes withheld from his employees. He attempted to evade taxes in multiple ways, including filing false tax returns and giving the IRS false information regarding an Offer in Compromise. He also placed companies and bank accounts in the names of others. He pleaded guilty in U.S. District Court and now faces up to five years in prison and a $250,000 fine.
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