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Trust Fund Recovery Penalty

2019 – 02/01 Employers must withhold Social Security and income taxes from their employees’ wages. Employers collect these taxes each pay period, and then remit them to the IRS on a quarterly basis. If an employer willfully fails to pay over collected taxes, the IRS can impose a “trust fund recovery penalty” from a responsible person. In a recent case, a U.S. District Court ruled that a business partner owed the penalty. Among the reasons: He had signature authority over bank accounts, hired and fired employees, and decided which creditors were paid. (Ireland, DC CA, 1/23/19)


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