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Trust Fund Recovery Penalty (TFRP) Defense
Personal-liability defense under IRC § 6672 against responsible-person assessments for unpaid payroll trust-fund taxes.
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Call (877) 829-5267Tax Attorney · Villanova University School of Law · Admitted in Delaware, New Jersey, United States Tax Court
The Truth About Trust Fund Recovery Penalty (TFRP) Defense — And What To Do Right Now
The Trust Fund Recovery Penalty (TFRP), assessed under IRC § 6672, is the IRS's most aggressive personal-liability weapon. It pierces the corporate veil completely — making owners, officers, controllers, and even bookkeepers personally liable for 100% of the unpaid trust-fund portion of a business's payroll taxes (withheld income tax and the employee share of FICA).
Who the IRS Targets for the TFRP
A "responsible person" under § 6672 is any individual with the duty and authority to collect, account for, and pay over withheld employment taxes — and who willfully fails to do so. The IRS routinely names multiple people on the same assessment, including:
- Owners, partners, and shareholders with check-signing authority
- Corporate officers — CEO, CFO, President, Treasurer, Controller
- Bookkeepers, office managers, and payroll managers with discretion over which bills get paid
- Board members involved in financial decisions
- Outside CPAs and lenders in narrow circumstances
The Form 4180 Interview Is Where the Case Is Won or Lost
The IRS Revenue Officer's investigation centers on the Form 4180 interview — a recorded, sworn examination that asks the same fifty-plus questions of every potential responsible person. Answers are used to build the responsibility and willfulness determination. Going into a Form 4180 without counsel is one of the most costly mistakes a business owner can make.
How We Defend Against TFRP Assessments
- Pre-assessment defense: Most cases are decided before assessment. We respond to the Letter 1153/Form 2751 proposal, gather contemporaneous evidence (bank signature cards, board minutes, payroll authority), and negotiate with the Revenue Officer before the assessment posts.
- Challenge responsibility: Title alone is not enough. We prove our client lacked actual authority over which bills were paid — often the difference between a six-figure personal assessment and zero liability.
- Challenge willfulness: Willfulness requires knowledge plus a deliberate choice to prefer other creditors. Following an owner's instructions, lack of knowledge, and reasonable cause are all viable defenses.
- Appeals: If the Revenue Officer assesses, we file a timely protest to IRS Appeals — an independent forum where the hazards-of-litigation standard often produces settlements not available at the agent level.
- Refund litigation: When Appeals fails, we file a refund suit in U.S. District Court or the Court of Federal Claims (Flora full-payment rule) to litigate responsibility and willfulness de novo.
- Collection alternatives once assessed: Offer in Compromise, partial-pay installment agreement, currently-not-collectible status, and (in narrow cases) bankruptcy — each available against a TFRP balance.
Why Speed Matters
The IRS has a three-year statute from the date the underlying 941 return was filed (or due) to assess the TFRP. Most assessments come in the final months of that window — meaning if you've received a Letter 1153, you typically have 60 days to file a protest to Appeals. Miss it and your only remedy is paying the full assessment and suing for refund.
People Just Like You Have Sat In This Exact Chair
They were terrified. They were ashamed. They thought they were the only one. Then they made one phone call — and everything changed.
Controller cleared of $187K TFRP at Form 4180
A Cherry Hill, NJ controller was named alongside the owner on a $187,000 TFRP proposal. We prepared her for the Form 4180, established she had no authority over which creditors got paid, and the IRS assessed only against the owner.
Bookkeeper's $94K TFRP withdrawn on Appeal
A Delaware County bookkeeper signed payroll checks under the owner's instruction. We filed a protest to IRS Appeals citing lack of willfulness; Appeals withdrew the assessment in full.
Owner's $312K TFRP settled via OIC for $28K
A Wilmington restaurant owner personally assessed $312,000 in TFRP after the business closed. We submitted an Offer in Compromise based on reasonable collection potential and the IRS accepted $28,000.
Pre-assessment defense — no TFRP proposed
A construction company faced a Revenue Officer investigation of three corporate officers. We engaged before the Form 4180 interviews and submitted a detailed responsibility/willfulness memo; the RO declined to propose the TFRP against any of the three.
That Letter In Your Hand? Here's What It Really Means.
The IRS writes notices in code on purpose. If any of these landed in your mailbox, trust fund recovery penalty (tfrp) defense is exactly how we fight back — and the clock is already ticking.
This is the IRS's first notice telling you that you owe taxes. It shows the amount due, including any penalties and interest.
Deadline: 21 days
This is a final notice before the IRS seizes your assets. They intend to levy (take) your state tax refund and may seize other assets.
Deadline: 30 days
This is the absolute final warning. The IRS will begin seizing your wages, bank accounts, and property within 30 days.
Deadline: 30 days
Every Day You Wait, The IRS Wins A Little More.
Penalties stack. Interest compounds. Legal options quietly disappear. One free call ends the spiral.
Exactly How We Take This Off Your Shoulders
The hardest step is the first one. Everything after that, we carry for you. No surprises. No runaround. No lectures.
- 1
Immediate triage of the 1153 / RO investigation
We identify every potential responsible person, the assessment window, and the protest deadline before anything else.
- 2
Prepare for the Form 4180 interview
We walk through every question, identify the responsibility and willfulness pressure points, and represent you at the interview itself.
- 3
File the protest to IRS Appeals
If the RO assesses, we file a timely protest with a full responsibility/willfulness memo and request an independent Appeals review.
- 4
Litigate or settle
Appeals settlement, refund litigation in District Court / Court of Federal Claims, or a negotiated OIC — whichever path produces the best outcome.
- 5
Resolve any individual balance
If an assessment survives, we move to OIC, partial-pay installment, or CNC to resolve the personal balance without future enforcement.
Trusted by Thousands of Taxpayers
Real results from real clients
Robert M.
Sandra L.
Michael T.
Jennifer K.
David R.
Maria G.
Thomas W.
Patricia H.
James C.
Robert M.
Sandra L.
Michael T.
Jennifer K.
David R.
Maria G.
Thomas W.
Patricia H.
James C.
Robert M.
Sandra L.
Michael T.
Jennifer K.
David R.
Maria G.
Thomas W.
Patricia H.
James C.
Robert M.
Sandra L.
Michael T.
Jennifer K.
David R.
Maria G.
Thomas W.
Patricia H.
James C.
"McCauley Law resolved my $180,000 IRS debt for a fraction of what I owed. I was facing wage garnishment and bank levies — they stopped everything and negotiated an incredible settlement."
Robert M.
Philadelphia, PA
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The Questions Keeping You Up At Night — Answered
Other Ways We Shut The IRS Down
Offer in Compromise
Settle your tax debt for less than what you owe through IRS settlement programs.
Installment Agreement
Set up manageable monthly payment plans to pay off your tax debt over time.
Currently Not Collectible
Prove financial hardship to temporarily halt IRS collection activity.
Penalty Abatement
Remove or reduce IRS penalties through first-time abatement or reasonable cause.
One Phone Call. Or Another Sleepless Night.
Stop Letting The IRS Own Your Mornings.
You already know what happens if you do nothing. Pick up the phone for a free, confidential conversation with a real tax attorney — 30+ years inside the IRS playbook — and finally start fighting back.
Call (877) 829-5267 NowPrimary Sources & Authority
We cite the underlying IRS publications and statutes so you can verify everything on this page.