An individual with authority over an employer\'s payroll tax decisions who can be held personally liable for 100% of unpaid trust fund taxes via the IRS Trust Fund Recovery Penalty.
Why Responsible Party (Trust Fund) matters for employers
The IRS defines a responsible party as anyone with significant authority and control over the employer's financial decisions, including the decision to collect and remit payroll taxes. This can include owners, officers, payroll managers, and even outside accountants who direct when bills are paid. If withheld payroll taxes are not deposited and the IRS pursues the Trust Fund Recovery Penalty, the responsible party is personally liable for the full amount of unpaid trust fund taxes, regardless of the business entity's structure.
Courts have consistently upheld the TFRP against individuals who had knowledge of the unpaid taxes and the authority to cause payment. Personal bankruptcy does not discharge TFRP liability. This is why proper payroll tax deposit compliance is one of the most critical obligations any employer faces.
How BEG handles Responsible Party (Trust Fund) for clients
BEG Managed Payroll handles Responsible Party (Trust Fund) as part of a fully managed payroll service at $25-$45 per employee per month. Clients do not need to track compliance rules, filing deadlines, or calculation methods related to Responsible Party (Trust Fund) on their own. Everything is included. Learn about BEG Managed Payroll.
Frequently asked questions
Do employers have to manage Responsible Party (Trust Fund) themselves?
No. A managed payroll provider handles Responsible Party (Trust Fund) as part of full-service payroll. BEG manages this for clients at $25-$45 PEPM with no system migration required.
What happens if Responsible Party (Trust Fund) is handled incorrectly?
Errors related to Responsible Party (Trust Fund) can trigger IRS penalties, state agency assessments, or employee disputes. Catching and correcting errors before filing is far less costly than after-the-fact corrections.
How does BEG handle Responsible Party (Trust Fund) for managed payroll clients?
BEG tracks, calculates, and remits everything related to Responsible Party (Trust Fund) as part of fully managed payroll. Clients do not need to monitor compliance -- that is included in the service at $25-$45 PEPM.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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