Trust Fund Recovery Penalties (TFRP) in Georgia: Personal Liability for Business Tax Debt and Defense Strategies
A Trust Fund Recovery Penalty is one of the IRS’s strongest collection tools because it can make a business tax debt personal. When a Georgia business withholds payroll taxes from employees but fails to send that money to the IRS, the government can pursue the individuals it believes were responsible for the unpaid taxes. The penalty can equal 100% of the unpaid trust fund portion of the payroll tax debt, including withheld income tax and the employee share of Social Security and Medicare.
That means a corporation, LLC, or partnership may owe the tax, but the IRS may still assess the debt against owners, officers, payroll managers, check signers, or anyone with real control over business finances.
What the IRS Must Prove
The IRS must generally prove two things.
- First, you were a “responsible person.” This means you had authority over payroll, tax deposits, bank accounts, creditor payments, or business financial decisions.
- Second, the failure to pay was “willful.” Willfulness does not always mean criminal intent. The IRS may argue willfulness if you knew payroll taxes were unpaid and chose to pay other bills instead.
A defense may focus on showing that you did not control payments, did not know the taxes were unpaid, were blocked from financial decisions, relied reasonably on another person, or were not involved during the tax periods at issue.
Georgia Tax Defense Starts Quickly
TFRP cases move fast. The IRS typically issues a proposed assessment and gives a limited time to appeal before collection begins. Once assessed, the IRS may pursue liens, levies, wage garnishment, and bank account seizures.
The Law Office of Max Benkel in Atlanta handles IRS controversies, audits, appeals, payment plans, offers in compromise, and IRS collection matters. If you need a tax attorney in Atlanta, contact us today for direct help with TFRP defense.
