What is the Trust Fund Recovery Penalty?

The Trust Fund Recovery Penalty (TFRP) is assessed by the IRS when companies fail to pay the payroll taxes withheld from employee paychecks to the IRS as required.

The Internal Revenue Code allows the IRS to collect unpaid payroll taxes directly from business owners, officers, or employees deemed "responsible persons." This means, if the IRS deems you responsible:

Your personal assets are at risk, including your bank accounts and property
The IRS can seize your home and other personal possessions
You could remain liable even if the business closes or files for bankruptcy
Penalties can reach 100% of the unpaid taxes

How We Defend Against TFRP Assessments

At Ayar Law, we've helped countless Detroit business owners successfully challenge trust fund recovery penalties. Our defense strategies include:

Proving You're Not a "Responsible Person" We collect documentation showing you lacked authority over tax payments or financial decisions.
Demonstrating Lack of Willfulness. We show the failure to pay wasn't willful by documenting that funds were unavailable or other factors prevented payment.
Handling IRS Appeals: We represent you before IRS appeals to negotiate favorable outcomes without resorting to litigation in US Tax Court.
Resolving the Underlying Tax Liabilities We guide you through filing the business's unfiled tax returns and resolving unpaid taxes, typically through a partial-pay installment agreement.

Trust Fund Recovery Penalty Warning Signs

You received notices from the IRS about unpaid payroll taxes
An IRS revenue officer requested to meet with you
You are or were an officer, director, or check signer for a business with payroll tax problems.
The IRS asked you to complete interview forms about your role in the company.
Your business failed to file payroll tax returns or pay withheld taxes