01
Responsibility and willfulness
Responsibility = authority to direct payment. Willfulness = knowledge that trust-fund taxes were unpaid AND choice to pay other creditors first. Both prongs must be met; defending one is often enough.
Audit & Compliance
Trust Fund Recovery Penalty (TFRP) Procedure
When a business fails to remit payroll taxes withheld from employees, IRC §6672 lets the IRS pierce the corporate veil and assess the trust-fund portion personally against 'responsible persons' who 'willfully' failed to pay. TFRP survives bankruptcy and follows individuals for a decade.
Checklist Summary
An at-a-glance view of every step covered in this guide.
- Step 1: Preserve books, payroll records, and signature cards before the Form 4180 interview.
- Step 2: Attend the interview with counsel; provide only responsive answers.
- Step 3: Protest Letter 1153 within 60 days to Appeals.
- Step 4: If assessed, pursue collection alternatives (IA, OIC, CNC) on the personal assessment.
Key Forms & Notices
- Form 4180 (interview)
- Letter 1153 (proposed TFRP)
Statutes & Authority
- IRC §6672
Timeline Summary
Jump to any stage
02
The Form 4180 interview
The Revenue Officer's TFRP interview is a fact-finding exercise designed to identify responsible persons. Answers determine personal liability. Never attend without counsel; wrong answers here create six-figure personal assessments.
03
Appeal rights
After Letter 1153, the taxpayer has 60 days to file a protest to Appeals. TFRP cases settle at Appeals based on evidence of non-responsibility or non-willfulness. Waiving to Tax Court is not available; refund forum (District Court / Court of Federal Claims) is the litigation path.
How the Procedure Works
- 1Preserve books, payroll records, and signature cards before the Form 4180 interview.
- 2Attend the interview with counsel; provide only responsive answers.
- 3Protest Letter 1153 within 60 days to Appeals.
- 4If assessed, pursue collection alternatives (IA, OIC, CNC) on the personal assessment.
Frequently Asked Questions
Is TFRP dischargeable in bankruptcy?
No. TFRP is a §523(a)(1)(A) priority tax not dischargeable in Chapter 7 or 13.
Can multiple people be assessed?
Yes. TFRP is joint and several — the IRS can assess the full trust-fund amount against each responsible person separately.
Does paying the corporate 941 balance eliminate TFRP exposure?
Yes, dollar-for-dollar on trust-fund amounts once designated correctly. Paying non-trust portions (employer share) first does not reduce personal exposure — the designation of payment matters.
Can a bookkeeper be assessed TFRP?
Yes. Anyone with check-signing authority, the ability to determine which creditors get paid, or effective control over payroll can qualify as a 'responsible person' regardless of title or ownership.
Ready to act?
Start your case with a free review
A licensed tax attorney will pull your IRS transcripts, review your situation, and walk you through the resolution options that fit — no obligation.
Read next · Audit & Compliance
IRS Audit Procedure
The three types of IRS audits — correspondence, office, and field — and how each one is worked from opening letter to final determination.