Key Takeaways The TFRP equals 100% of unpaid trust fund employment taxes — assessed personally against responsible individuals "Responsible person" is defined broadly: officers, directors, bookkeepers, and anyone with authority over which creditors get paid The Form 4180 interview is the IRS's primary tool for identifying responsible persons — what you say matters enormously Multiple individuals can be assessed the TFRP for the same tax periods (joint and several liability) TFRP assessments survive bankruptcy — they cannot be discharged under Chapter 7 or Chapter 13 What Is the Trust Fund Recovery Penalty? The Trust Fund Recovery Penalty (TFRP), codified in IRC § 6672, allows the IRS to assess a penalty equal to 100% of unpaid trust fund employment taxes against any individual who was a "responsible person" and who "willfully" failed to collect, account for, or pay over those taxes. Trust fund taxes are the income tax withholding and employee's share of FICA taxes that an employer withholds from employees' paychecks. These funds are held "in trust" for the government — they never belonged to the employer. When an employer uses these funds for other business expenses instead of paying them to the IRS, the responsible individuals can be held personally liable. What's Included in Trust Fund Taxes Trust Fund (TFRP applies) Non-Trust Fund (TFRP does NOT apply) Federal income tax withholding Employer's share of FICA (Social Security + Medicare) Employee's share of Social Security tax Federal unemployment tax (FUTA) Employee's share of Medicare tax State unemployment tax Who Is a "Responsible Person"? The IRS defines "responsible person" broadly under IRC § 6672. You are a responsible person if you have the duty to collect, account for, or pay over trust fund taxes and you have the authority to direct which creditors are paid. The IRS looks at function, not...