The Trust Fund Recovery Penalty
(the 100% penalty) is authorized under section 6672 of the
Internal Revenue Code.
IRC Section 6672(a) provides the general rule:
Any person required to collect, truthfully account for,
and pay over any tax imposed by this title who willfully fails
to collect such tax, or truthfully account for and pay over such
tax, or willfully attempts in any manner to evade or defeat any
such tax or the payment thereof, shall, in addition to other
penalties provided by law, be liable to a penalty equal to the
total amount of the tax evaded, or not collected, or not accounted
for and paid over.
Thus, in determining whether to proceed with assertion of the
Trust Fund Recovery Penalty, the IRS must determine:
1. Responsibility and
2. Willfulness
NOTE: A person must be both
"responsible" and "willful" to be liable for
an employer’s failure to collect or pay over trust fund taxes to
the United States. The burden of production of the facts and
persuasion is on the taxpayer to prove, by a preponderance of the
evidence, that he is not a responsible person who willfully failed
to collect, account for, or pay over taxes.
