Glossary

IRC Section 6672

Section 6672 is the statute behind the trust fund recovery penalty, making any person required to collect and pay over employment taxes who willfully fails to do so personally liable for the unpaid trust fund amount.

How it works

Section 6672 makes any person required to collect, account for, and pay over employment taxes who willfully fails to do so personally liable for the unpaid trust fund amount. Willfulness means knowing the taxes were unpaid and paying other creditors instead; bad intent is not required. The IRS can assess multiple responsible persons for the same debt, and the penalty is not dischargeable in bankruptcy.

Why it matters

Business owners, officers, and sometimes bookkeepers end up personally liable for a company’s payroll taxes.

Related: trust fund recovery penalty, Form 4180.

Guides that cover iRC Section 6672

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Definitions are general information, not legal advice, and may not reflect the most recent changes in law.

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