Civil Trust Fund Negotiation

To encourage proment of withhrld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP. These taxes are called trust fund taxes because you actually hold the employee's money in trust until you make a federal tax deposit in that amount. The TFRP may apply to you if these unpaid trust fund taxes cannot be immeditately collected from the business. The buisiness does not have to have stopped operating in order for the TFRP to be asessed.

Who Can Be Responsible for the TFRP

The TFRP may be assessed against any person who:
*is responsible for collecting or paying withheld and employment taxes, or for paying collected excise taxes, and
*willfully fails to collect or pay them

A responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be:

*an officer or an employer of a corporation
*a member or employee of a partnership
*a corporate director or shareholder
*a member of a board of trustees of a nonprofit organization
*another person with authority and control over funds to direct their disbursement, or
*another corporation

For willfulness to exist, the responsible person:

*must have been, or should have been, aware of the outstanding taxes and
*either intentionally disregarded the law or was plainly indifferent to its requirements (no evil intent or bad motive is required).

Using available funds to pay other creditors when the buisness is unable to pay the employment taxes is an indication of willfulness.