Can I Be Held Responsible for My Employee's Unpaid Payroll Taxes?

Yes — if your business collects payroll taxes from employees but doesn't remit them to the IRS, the IRS can assess the Trust Fund Recovery Penalty (TFRP) against you personally. The TFRP equals 100% of the unpaid "trust fund" portion (employee income tax withholding and the employee share of FICA). Any person who was responsible for collecting and paying over the taxes and who willfully failed to do so can be personally liable — this includes business owners, officers, and sometimes accountants or bookkeepers with check-signing authority. The penalty is assessed against individuals, not just the business, so it survives bankruptcy. If you receive IRS Letter 1153, respond immediately with professional help.