In Birmingham, AL, the IRS can pursue a trust fund recovery penalty against more than one person if each had the duty and power to collect, account for, and pay over trust fund taxes and willfully failed to do so. That can include officers, employees, board members, or others with real control over disbursements. It is not limited to owners, and the business can still be operating when the issue arises.
Thank you for reading this post, don't forget to subscribe!Who the IRS may view as responsible
Under IRM 5.7.3, a responsible person is someone who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. The IRS can look beyond job titles and ownership. What matters is practical authority over payroll tax decisions and the company’s money.
Examples in the guidance include corporate officers, employees with authority over funds, board members of nonprofits, another corporation or third-party payer, and responsible parties within a common-law employer structure that uses a payroll service provider. More than one person can qualify, and each can be jointly and severally liable for the full unpaid trust fund amount, although the IRS collects that amount only once in the case.
What usually points toward responsibility
The IRS looks for significant control, not just ministerial tasks. Signing checks, preparing returns, or holding a title by itself is not always enough. A person may still be responsible if they had independent judgment over which creditors got paid, could direct disbursements, or could influence financing and payroll decisions.
The source materials draw an important line between mechanical duties and decision-making. A bookkeeper who merely signs checks at a supervisor’s direction is generally not responsible. By contrast, a controller or officer who oversees finances, manages payroll, and chooses to pay other creditors while payroll taxes remain unpaid may be treated as responsible. Willfulness can be shown when a person knew, or should have known, about the unpaid taxes and used available funds for other creditors instead.
How the procedure works before assessment
The IRS does not simply label someone responsible and bill them immediately. The process begins with an investigation and interview to understand each person’s duties, financial authority, and knowledge of unpaid taxes. The IRS may ask for a personal interview to determine the full scope of the person’s responsibilities.
If the IRS plans to assess the penalty, it issues a letter stating that intent. The taxpayer then has a limited window to appeal the proposed assessment under the instructions in the letter. If there is no response, the IRS can assess the penalty and send a notice and demand for payment. IRM 5.7.3 also notes that, in referral situations, Advisory determines within 30 days whether Field Collection will open an investigation. That timing helps explain why records and early responses matter.
Records to gather before you respond
The strongest file is usually built from documents that show who actually made payroll and bill-paying decisions. Useful records can include bank signature cards, corporate resolutions, payroll processing records, board minutes, email instructions about which creditors to pay, loan documents, organizational charts, and evidence showing who controlled cash flow or had to ask permission before paying bills.
If the issue involves a payroll service provider or another third party, gather the service agreement and proof of who retained authority over taxes and disbursements. If you are a non-owner employee, records showing that you followed orders and lacked discretion may matter. If you are the business owner or controller, records showing delegated authority do not automatically remove exposure, because the IRS focuses on actual control rather than title alone.
Questions about Who can be responsible for a trust fund recovery penalty?
Can more than one person be liable for the same TFRP?
Yes. The IRS can treat multiple people as responsible persons if each had the duty and power to collect, account for, and pay over the trust fund taxes and willfully failed to do so. The IRS collects the unpaid trust fund amount only once, but several people can be assessed.
Does being a bookkeeper or payroll clerk automatically create TFRP liability?
No. A person who only performs ministerial tasks, like signing checks or preparing returns at someone else’s direction, is generally not a responsible person. The key question is whether the person had significant control and independent judgment over which creditors were paid.
What should I do after I get the IRS proposed assessment letter?
Review the letter carefully, gather records that show your actual role, and decide whether you can dispute responsibility or willfulness. The letter explains the appeal window. A timely response matters because silence can lead to assessment and collection against personal assets.
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Sources and related resources
Tax.Directory IRS guidance and FAQs · IRSDecoder notice explanations · ETSVideos
Executive Tax Solution resources
Executive Tax Solution · TaxAssassin · MrTaxPlan · TaxFans · TaxDebtCalculator · LocalTaxMasters · TaxProDirectory · TaxSupportServices · TexasITIN · PremierTaxLiens
Top photograph: Andre Natta · CC BY 2.0.
General educational guidance. Relief and collection protections depend on the actual notices, account history, financial evidence, and applicable law. A consultation does not itself stop enforcement or preserve an appeal deadline.
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