Tax Blog

IRS's Small Business/Self-Employed (SB/SE) Division has issued an internal memorandum which provides that the trust fund recovery penalty may be imposed against third-party payroll service providers as well as the employer. IRC section 6672 imposes the TFRP on any person who: 1) is responsible for collecting, accounting for, and paying over payroll taxes; and, 2) willfully fails to perform the function.  This is also known as the 100% penalty because it is equal to the amount of the tax that was no collected and paid.

This appears to represent a major policy change by the IRS, which ...