Trust Fund Recovery Penalty — When the IRS Pierces the Corporate Veil
The Trust Fund Recovery Penalty (IRC 6672) makes responsible persons personally liable for 100% of unpaid trust-fund payroll taxes. Bankruptcy does not discharge it.
Withheld federal income tax and the employee's share of FICA are 'trust fund' taxes. When a business fails to remit them, the IRS can pursue any person who was responsible for collection and willful in failing to pay.
Frequently Asked Questions
More in IRS & Financial
What Is an IRS Installment Agreement?
An IRS Installment Agreement lets you pay back taxes in monthly payments. Here are the types, eligibility rules, fees, and how to apply.
How Does an Offer in Compromise Work?
An Offer in Compromise lets you settle IRS tax debt for less than you owe — but only if you genuinely cannot pay in full. Here is how the IRS evaluates an offer.
How to Stop an IRS Wage Garnishment
An IRS wage garnishment can take up to 85% of your paycheck. Here's how to get it released — sometimes within days.
Ready to get started?
Talk with our team — we'll prepare every form, file with the right agency, and walk you through the process.