STOP the IRS Trust Fund Recovery Penalty Before It Destroys Your Personal Finances
If you received IRS Letter 1153 or have a Revenue Officer asking for a Form 4180 interview, your personal assets are at risk—your wages, bank accounts, and even your home.
I’m Jim Payne, CPA and former IRS Revenue Agent. I help business owners, officers, and employees protect themselves when the IRS is trying to assess the Trust Fund Recovery Penalty (TFRP) personally.
If Payroll Taxes Went Unpaid, the IRS Is Coming After YOU—Not Just the Business
Payroll tax debt is nothing like ordinary business debt. The IRS treats unpaid trust fund taxes as employee money you withheld and never turned in—and they take that very personally. From their perspective, they get hit twice: once when the business fails to deposit the taxes, and again when they must still credit employees as if the taxes were paid.
Because of that, the usual protections don’t apply. The corporate veil often won’t shield you. Bankruptcy may not eliminate the debt. And the IRS can assess multiple people for the full amount and collect for 10 years after assessment.
The biggest mistake I see is business owners trying to keep a failing company afloat, digging themselves deeper. By the time the money runs out, the IRS assesses the TFRP, and the owner spends years trying to recover.
What the IRS Is Looking At: Are You a “Responsible Person”?
The IRS doesn’t care what your title was. They care what you actually did in the business.
You are at risk of being assessed if you:
- Had authority to sign checks or approve payments
- Controlled which creditors were paid and when
- Had access to payroll or tax deposit systems
- Had power to hire and fire employees
- Approved or directed payments while taxes went unpaid
Managers, controllers, bookkeepers, and new owners can all be pulled into a TFRP investigation—not just corporate officers.
What Happens Next (and Why the Timeline Matters)
Most TFRP cases follow this pattern:
- IRS Letter 1153 proposes assessing the TFRP and gives you 60 days to respond.
- The Revenue Officer schedules a Form 4180 interview to document your role and knowledge.
- If you don’t respond or don’t defend yourself effectively, the IRS assesses the TFRP.
- After assessment, the IRS can levy wages, seize bank accounts, and file tax liens for up to 10 years.
It is far easier to prevent assessment than to undo it once everything is final.
Your Possible Defenses
You Weren’t Responsible
You may have a defense if you did not truly have authority over finances, payroll, or tax deposits. For example:
- You had no check-signing authority
- You could not decide which creditors were paid
- You had no real access to payroll or tax payment systems
- You followed instructions from someone above you
You Weren’t Willful
Even if you had some authority, you may not be liable if you did not willfully allow taxes to go unpaid. For example:
- You did not know the payroll taxes were not being paid
- You reasonably relied on another person to make deposits
- The business was in receivership or under lender control
Payment Designation Strategy
In some cases, the way voluntary payments are designated and applied can reduce or eliminate the final TFRP balance. Strategy matters here.
Real Cases I’ve Seen
- A contractor paid vendors to keep jobs moving instead of the IRS and was assessed personally for about $180,000.
- A CEO assumed the CFO was handling payroll tax deposits, but emails and authority showed the CEO still had control and was assessed.
- A new owner bought a business with hidden payroll tax debt, took control of finances, and became liable for trust fund taxes from prior quarters.
How I Protect You
As a CPA and former IRS Revenue Agent, I know how Revenue Officers build TFRP cases—and where they overreach.
When you hire me, I:
- Analyze your true role using the same factors the IRS applies
- Prepare you for the Form 4180 interview or attend on your behalf
- Develop a defense strategy based on responsibility and willfulness
- Represent you in Appeals when the IRS gets it wrong
- Create a realistic resolution plan to protect your personal finances
Fixing Why Businesses Fall Behind on Payroll Taxes
Most tax resolution firms stop once they negotiate a payment plan or settlement. Six months later, many businesses are behind again because the underlying problems were never fixed.
I go further by helping you repair the financial and operational issues that caused the payroll tax problem in the first place:
- Improving cash flow management and separating tax funds from operating cash
- Setting up systems so you can see real-time profitability instead of guessing from the bank balance
- Fixing pricing and job costing so your work is actually profitable
- Creating a schedule to keep current taxes paid going forward
When Closing the Business Is the Right Answer
Not every business can be saved, and I will tell you that honestly.
Sometimes the worst thing you can do is keep a failing business running. Every extra month adds more payroll tax, more penalties, and more interest—while your personal risk keeps growing.
In those situations, I help you think through a strategic wind-down that minimizes additional damage, allows a realistic IRS resolution, and gives you a chance to start over without repeating the same mistakes.
Next Step: Schedule a Confidential Consultation
You do not have to face the IRS alone. The earlier you get qualified help, the more options you usually have.
In a confidential, judgment-free consultation, I will help you understand:
- Whether you truly meet the IRS definition of a responsible person
- Which defenses might apply in your case
- What to do before a Form 4180 interview
- How to respond to IRS Letter 1153
- What a realistic resolution might look like for you and your business
If you are facing a Trust Fund Recovery Penalty investigation or assessment, now is the time to take control of the situation and protect your future.
