Archive for Trust Fund Penalty

Double Trouble! Employment Taxes & The Trust Fund Recovery Penalty


Lord, hou schulde God approve that you robbe Petur and gif is robbere to Poule in ye name of Crist?”

John Wycliffe, Selected English Works, c. 1380

In medieval England, the Christian Peter and Paul were two peas in a pod. They were both apostles and both martyred in Rome. They even shared the same feast day (June 29). So, the idea behind the phrase “robbing Peter to pay Paul” is that the victim and payee are similar in wisdom and stature (to borrow a phrase). The modern-day equivalent is taking a cash advance from one credit card to make the minimum payment on another one, assuming that they both have a similar interest rate. Read more

Are You at Risk for a Trust Fund Penalty?

Barry Fowler42

When an employer withholds Social Security and income taxes from an employee, those funds are the property of the government, and the employer must hold those funds in “trust” until the funds are turned over to the government. Failure to do so could lead to the so-called trust fund penalty, which is equal to 100% of the withholding from the employees’ wages. The penalty applies to any willful failure to collect, account for and pay over Social Security and income taxes required to be withheld from employee wages.

A recent report issued by the Treasury Inspector General for Tax Administration has made recommendations to the IRS for timely assessing and collecting the responsible person penalty, and the IRS is adopting the recommendations. The government has always been very aggressive about collecting trust fund Read more