Payroll tax debt · Form 941 · IRC 6672
Your company owes payroll taxes. The IRS wants to make it personal.
When a business stops depositing withheld taxes, the IRS can assess the Trust Fund Recovery Penalty against the people behind it: owners, officers and, in some cases, employees. This site explains how that process works, what the IRS has to prove, and where your defenses are.
Case pipeline
How a Payroll Tax Case Becomes a Personal One
Most trust fund cases follow the same sequence. Find where you are, then read the guide for that stage.
Stage 01
Deposits stop
The business misses Form 941 deposits. Penalties under IRC 6656 start stacking up.
Stage 02
Revenue Officer assigned
A field collector contacts the business, demands current compliance and starts a trust fund investigation.
Stage 03
Form 4180 interviews
Owners, officers and key employees are interviewed about who controlled the money.
Stage 04
Letter 1153
The IRS proposes the penalty against named individuals. The 60-day protest window opens.
Stage 05
Appeals or assessment
A timely protest goes to the Independent Office of Appeals. No protest means assessment.
Stage 06
Personal collection
Liens, levies and CDP rights against the individual. Payment plans, offers and refund suits.
Guide library
Payroll Tax and Trust Fund Penalty Guides
In-depth, sourced guides to the Internal Revenue Code, Treasury regulations and the Internal Revenue Manual procedures that govern payroll tax collection.
Letter 1153 and Appeals4 guides
The 60-day notice, the protest, the assessment deadline, and what is left to argue after assessment.
The TFRP Investigation2 guides
How the Revenue Officer builds the file: interviews, bank records, third-party contacts and summonses.
Responsible Person Defenses5 guides
Responsibility and willfulness, the two elements the IRS must prove, and the people the law treats differently.
- Willfulness Under IRC 6672: What the IRS Must Prove and How to Push Back
- Bookkeepers, Controllers and Office Managers: When Non-Owners Face the TFRP
- New Owners, Departing Officers and the Quarters You Did Not Control
- Unpaid Nonprofit Board Members and the Trust Fund Recovery Penalty
- When Your Payroll Company Takes the Money and Does Not Pay the IRS
Payments, Refunds and Settlement7 guides
Designated payments, multiple responsible persons, contribution, refund suits, bonds, offers and spouses.
- Designating Payments to the Trust Fund Portion: The Letter That Protects Owners
- More Than One Responsible Person: Who Pays, and How the IRS Keeps Score
- You Paid the Trust Fund Penalty. Your Partner Did Not. The Right of Contribution
- Fighting an Assessed Trust Fund Penalty: Divisible Payments, Form 843 and Refund Suits
- The Section 6672(c) Bond: Pay a Little, Post Security, Stop the Levies
- Offers in Compromise on Trust Fund Taxes: Business Offers, Personal Offers and Doubt as to Liability
- Your Spouse and Your Trust Fund Recovery Penalty: What Reaches Home and What Does Not
Form 941 and Deposits6 guides
Where payroll tax debt comes from: deposit rules, deposit penalties, corrections, FUTA and entity rules.
- IRC 7501 and the Trust Fund: Why Withheld Taxes Were Never the Company's Money
- Monthly, Semiweekly or Next Day: The Payroll Tax Deposit Rules Behind Every Form 941 Debt
- The Failure-to-Deposit Penalty Under IRC 6656: Relief, Designation and First-Time Abatement
- Form 941-X: Fixing Payroll Tax Errors Before They Become Payroll Tax Debt
- Form 940 and FUTA Debt: The Payroll Tax That Is Not a Trust Fund Tax
- Single-Member LLCs and Payroll Tax: Disregarded for Income Tax, Not for Form 941
Business Levies and Enforcement6 guides
What the IRS does to an operating business that owes payroll taxes, and how to get ahead of it.
- When the IRS Levies Your Customers: Accounts Receivable Levies for Payroll Tax Debt
- Pyramiding: What Happens When a Business Keeps Adding New Payroll Tax Debt
- Letter 903 and Section 7512: The IRS's Last Warnings Before Injunctions
- Paying Old Payroll Taxes Over Time: Simple Payment Plans (Business Trust Fund) and Larger Agreements
- Closing the Doors Does Not Close the Case: Shutting Down a Business With Payroll Tax Debt
- When You Fund Someone Else's Payroll: Lender, Surety and Contractor Liability Under IRC 3505
Who writes this site
Attorney Darrin T. Mish
I am a tax attorney in Tampa. I represent business owners, officers and employees in payroll tax and Trust Fund Recovery Penalty matters with the IRS. Federal tax matters before the IRS can be handled nationwide.
- The Florida Bar, No. 986641, admitted 1993
- Also admitted in Colorado and Texas
- Admitted to the United States Tax Court
- Admitted to the Supreme Court of the United States