Employment Taxes and The Trust Fund Recovery Penalty (Video) (Course Id 2681)

• Who is this course for?
  This course is intended for anyone needing Continuing Professional Education (CPE), including CPAs and IRS Enrolled Agents.

• What is this course about or what problem does this course solve?
  The course addresses the proper handling of Form 941 employment taxes and explores the legal implications and defenses surrounding the Trust Fund Recovery Penalty (TFRP).

• How can the knowledge from this course be used?
  The knowledge gained can be used to identify, prevent, or defend against IRS enforcement of the TFRP for responsible individuals who fail to remit withheld payroll taxes.

• Why is this course important to a CPA, Accountant, or IRS Enrolled Agent?
  This course is crucial because it equips professionals with the understanding needed to navigate IRS procedures related to employment tax liability and defend clients or themselves in TFRP cases.

• When is this course relevant or timely?
  The course is especially relevant in 2025 and beyond, as it addresses current legal interpretations and IRS enforcement strategies related to employment tax compliance.

• How is a course like this consumed or used?
  This course is consumed as a QAS self-study video, requiring completion of review questions and a final exam to earn CPE credit.

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. 

In this presentation, I will cover the basics of Form 941 taxes. Form 941 taxes represent the amount of money that an employer must withhold from his or her employees wages for remittance to the IRS. This includes social security, Medicare, and income taxes. We'll then discuss the Trust Fund Recovery Penalty. To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the Trust Fund Recovery Penalty (TFRP). Sec. 6672(a) imposes a penalty on any person who is “responsible” for paying payroll taxes and “willfully” fails to do so. 

We'll delve into the situations in which the TFRP arises, cover the procedures surrounding it, the defenses, how easy it is for the IRS to prove a case, what happens if your client loses, how the IRS applies TFRP payments, and tattle tailing on others.
 

Video - NASBA QAS - NASBA Registry - IRS Enrolled Agents - 2681

Course Learning Objectives

1. How does the concept of willfulness affect the determination of liability for the Trust Fund Recovery Penalty?
2. In what ways do the legal restrictions on assets held by an employer differ from contractual obligations in the context of TFRP liability?
3. What are the implications of the IRS's policy to collect the Trust Fund taxes only once on responsible persons who may be assessed the TFRP?
4. How might the reasonable cause exception, as recognized by some circuits, influence a responsible person's defense against TFRP liability?
5. What factors contribute to the IRS's decision-making process when determining who is considered a responsible person under the TFRP?
6. How does the statute of limitations impact the IRS's ability to assess and collect the TFRP from responsible individuals?
7. In what scenarios might volunteers for tax-exempt organizations be exempt from the TFRP, and what are the limitations of this exemption?
8. How can responsible persons affected by TFRP liability seek recourse or contribution from others who may also be liable?
9. What strategies can a business employ to avoid incurring TFRP liability during periods of financial difficulty?
10. How does the IRS's approach to audits and appeals in TFRP cases differ from that of other tax examinations, and why is this significant?
11. What are the potential consequences for a responsible person if an employer files for bankruptcy while trust fund taxes remain unpaid?
12. How does the concept of "willful blindness" apply to the TFRP, and in what ways can it affect a responsible person's liability?

Chapter 1 - Employment Taxes and The Trust Fund Recovery Penalty

Chapter 1 Review Questions