Within June and August 2023, four individuals pleaded guilty and were sentenced to prison due to failure to pay their employment taxes, including one who used funds from his tax obligations for personal expenses. Even though oversight of employment tax can be a common mistake, it may result in a Trust Fund Recovery Penalty by the IRS (TRFP), which can be held against an individual rather than the business itself. According to the Internal Revenue Code, the TFRP may be assessed against any responsible person inside a company who willfully fails to collect or pay employment taxes; this includes officers, shareholders, or even employees of a corporation. Experts recommend being extremely careful with this set of circumstances that can lead taxpayers to prison.
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