Problems We Solve

Trust Fund Recovery Penalty

The IRS is making you personally liable for your company's payroll taxes. This is the one penalty you can't discharge in bankruptcy.

The IRS just sent you a letter saying you're personally responsible for your company's unpaid payroll taxes. Not the business. You. Your Social Security number. Your bank account. Your house.

That's the Trust Fund Recovery Penalty, and it's one of the most aggressive tools in the IRS collection arsenal. It takes a business tax debt and pins it on a human being. And it doesn't just apply to business owners. Officers, directors, bookkeepers, accountants — anyone the IRS determines was responsible for collecting or paying over payroll taxes can be personally assessed.

The Penalty

What the Trust Fund Recovery Penalty Actually Is

When a business withholds income tax, Social Security, and Medicare from employees' paychecks, that money is held "in trust" for the government. If those funds aren't deposited with the IRS, the IRS can assess the Trust Fund Recovery Penalty against any "responsible person" who willfully failed to pay.

The penalty equals 100% of the unpaid trust fund taxes. Not a percentage. The full amount. If your company failed to deposit $80,000 in payroll taxes, the IRS can assess $80,000 against you personally — on top of whatever the business owes.

The Target

Who the IRS Considers a "Responsible Person"

This is broader than most people expect. The IRS looks at who had the authority to decide which bills got paid. If you had signature authority on the business bank account, if you directed payroll, if you made decisions about which creditors to pay when cash was tight — the IRS may determine you're a responsible person.

The IRS casts a wide net, and they can assess the penalty against multiple people for the same debt.

Business owners, CEOs, and managing partners with check-signing authority

CFOs, controllers, and HR directors who managed payroll decisions

Outside bookkeepers and accountants who directed tax deposits

Anyone who decided which creditors got paid when cash was short

The Clock

Why This Requires Immediate Action

The TFRP doesn't follow the same 10-year collection statute as other tax debts. The IRS has 3 years from the date the tax was assessed to assert the penalty against a responsible person, but once asserted, they get a fresh 10 years to collect from you.

And because it's a personal assessment, it survives the business closing, bankruptcy, and dissolution.

Letter 1153 — 60-Day Window

If you've received Letter 1153, the IRS is proposing the TFRP against you. You have 60 days to appeal. Once the penalty is assessed, it's significantly harder to fight.

Survives Everything

You cannot hide from this by shutting down the company. The debt follows you personally. It survives bankruptcy, dissolution, and corporate restructuring.

That appeal window is critical. Once the penalty is assessed, it's significantly harder to fight.

The Triage

How We Handle It

We review the assessment, determine whether the IRS correctly identified you as a responsible person, and build your defense.

Challenge the Assessment

We determine whether the IRS correctly identified you as a responsible person. In some cases, we can demonstrate you lacked the authority or willfulness required for the penalty.

Protect Your Assets

We work to shield your personal property, bank accounts, and wages from IRS collection actions while we build and execute your defense strategy.

Negotiate Resolution

When we can't eliminate the penalty entirely, we negotiate the resolution to minimize the personal damage — installment agreements, offers, or hardship status.

Your Move

The IRS Designed This Penalty to Be Inescapable. It Takes a Professional to Find the Exit.

Call 909-570-1103 or go to TaxDebtTriage.com. If you've received Letter 1153 or any notice regarding payroll tax personal liability, the clock is already running. Don't respond to the IRS before talking to us.

The IRS designed this penalty to be inescapable. It takes a professional to find the exit.

No obligation. Confidential. · 1255 W Colton Ave, Suite #535, Redlands, CA

About the Author

Carlos Samaniego, EA

NTPI Fellow and founder of Tax Debt Consultants LLC in Redlands, California. Carlos represents taxpayers before the IRS nationwide and before the California Franchise Tax Board statewide. He owed the IRS himself before he became an Enrolled Agent.

Published: August 5, 2026

Last updated: August 5, 2026

Verify credentials