Trust Fund

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When a business does not send payroll taxes to the IRS, the IRS will assess a penalty against individuals who are responsible for not doing so.

This penalty is called Trust Fund Penalty because it imposes a fine that is equal to the portion of the payroll taxes that were withheld from employee’s pay and held in trust for the government. The IRS must first make an investigation and, assuming it makes an assessment against your or other employees of your company, it can then begin collection efforts aimed at your personal assets.

 

Solution

It is imperative you enter into an agreement with the IRS as this is money that was withheld from an employee’s paycheck and never remitted to the IRS. The different options include Installment Agreement or Hardship Status.