| Trust Fund Recovery Penalty, aka Internal Revenue | | | | Normally, when an entity accrues a Code 6672 liability, |
| Code 6672 liability, establishes the legal procedure for | | | | the entity has undergone a period of financial difficulty, |
| collecting trust fund taxes. Regarding employment | | | | and in order to temporarily compensate, redirects |
| taxes, specifically, trust fund taxes entail wages that | | | | employees' Federal Insurance Contributions Act (social |
| have been withheld for Social Security and Medicare. | | | | security, Medicare, and income tax withholdings) to its |
| These holdings are reported every quarter on Form | | | | creditors. Therefore, the people tied to the decision to |
| 941, which is filed by any group whose employees | | | | divert funds from the IRS/those responsible for |
| complete W2s. In the event that there is an unpaid | | | | submitting Form 941 are held liable for the balance |
| balance associated with the quarterly report, it may | | | | owed to the IRS. |
| become an Internal Revenue Code 6672 liability. | | | | IRS Tax penalties may be lowered against a number |
| Section 6672 grants the IRS the ability to collect from | | | | of persons for identical liabilities. Thus the IRS |
| the personal assets of the persons responsible for the | | | | assesses the penalty, placing onus on the individuals to |
| accumulation of the IRS tax penalty. I will go over the | | | | divvy up the costs accordingly. In the event that the |
| framework for assigning responsibility in IRS Tax Audit: | | | | persons, as a group, pay more than the amount due, |
| assigning responsibility for a Trust Fund Recovery | | | | the extra money is then refunded to the final person to |
| Penalty. | | | | pay. |