Potentially Liability of the Outside CPA for a Client's Payroll Taxes
CPAs should be aware of the potential liability they can assume if they handle a client's "trust fund" taxes. These taxes include payroll taxes on the federal level, as well as income tax withholdings and sales and seller's use tax on the state/local level. If the client fails to pay these taxes, the IRS and the Alabama Department of Revenue each have the power to assess the so-called 100% penalty against each of the "responsible parties". The penalty is known officially as the Trust Fund Recovery Penalty ("TFRP").