When social security, Medicare and income taxes that must be withheld are not withheld or are not deposited or paid to the IRS, the trust fund recovery penalty (aka “100% penalty”) may apply. The penalty is the full amount of the unpaid trust fund tax. This penalty may apply to you if these unpaid taxes cannot be immediately collected from the employer or business.
The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes and who acted willfully in not doing so.
For example, if you volunteer for a charitable organization and perhaps are a member of the board or are an officer, if the charity fails to pay it’s trust fund taxes, you may be personally liable for all or a portion of the unpaid amount. There may not be insurance available to cover you if that happens.
Call for professional tax advice to help solve tax problems like this. Call Mitchell A. Port at (310) 559-5259.