Key Takeaways Corporate officers and business owners can be held personally liable for unpaid business taxes despite the corporate form The Trust Fund Recovery Penalty is the most common source of personal liability, making responsible persons liable for 100% of unpaid trust fund taxes Piercing the corporate veil and alter ego doctrines allow the IRS to disregard the business entity and pursue owners personally State-level responsible person statutes create additional personal liability for sales tax, withholding, and other obligations Proactive steps can protect personal assets and reduce the risk of personal liability The Growing Risk of Personal Liability In recent years, the IRS has intensified its pursuit of personal liability against corporate officers and business owners. The IRS Revenue Officer workforce has been expanded, and the agency has developed more sophisticated tools for identifying responsible persons and tracing asset transfers designed to avoid collection. Additionally, the IRS has been more aggressive in applying the Trust Fund Recovery Penalty to a broader range of individuals, including lower-level employees with financial authority, former officers who left the company before the tax delinquency was resolved, and even family members who participated in financial decision-making. This trend means that business owners must be more vigilant than ever about maintaining proper corporate structures, ensuring tax compliance, and understanding the circumstances under which their personal assets could be at risk. The consequences of personal tax liability are severe — the IRS can levy bank accounts, garnish wages, file liens against real property, and seize personal assets to satisfy the liability. Unlike business debts that may be dischargeable in bankruptcy, tax debts assessed under the TFRP or alter ego theories are generally not dischargeable and survive personal bankruptcy proceedings. Understanding Personal Liability for Business Taxes One of the primary reasons business owners form corporations, LLCs, and other...