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Examples of trust fund recovery penalty determinations

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    Individuals that are considered responsible persons and therefore subject to the trust fund recovery penalty are not always corporate officers. Liability can extend to any individual connected to the business that has the power and authority to collect and pay employment taxes. The following are some examples of individuals who are likely to be considered responsible persons:

    • Chief accountant and controller who had unrestricted access to the checking accounts and who, despite knowledge of a payroll tax deficiency, signed checks for payroll and other creditors
    • Treasurer of a corporation who knew that the officer in charge of finances did not pay employment taxes
    • Officer who delegated company operations to a general manager
    • Individual who made final decisions on payments but delegated signing checks and filing returns
    • Business owner’s spouse who acted as bookkeeper and paid personal bills prior to employment taxes

    Here are some examples of individuals who are NOT likely to be considered responsible persons for purposes of the trust fund recovery penalty:

    • Secretary and assistant treasurer who was not an officer and did not have decision-making authority, and was unaware that employment taxes were unpaid
    • Vice-president who did not have the authority to determine which creditors to pay first
    • Business owners son who acted as secretary and treasurer but did not have independent authority due to the tight control of his father
    • Significant shareholder with authority to pay creditors but did not participate in such decisions
    • President of corporation who had the authority to pay creditors but was not responsible for the company’s finances, did not have access to financial records, and did not deal with creditors or sign tax returns
    • Business owner’s spouse who had the ability to write checks but did not have bookkeeping responsibilities, did not manage the company, and did not hire and fire employees.
    • Director of public corporation that did not manage daily financial operations, had no authority to sign checks, did not oversee payroll, did not decide which creditors to pay, and did not have significant voting stocks
    • Vice-president and general manager with minimal authority to sign checks and no authority to authorize payments of creditors


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