How do employment tax deposits and Form 941 work?

An employer deposits the income tax it withholds and the employee and employer shares of Social Security and Medicare by electronic funds transfer, on a monthly or semiweekly schedule that Publication 15 explains. EFTPS is one free method. The employer reports wages and taxes each quarter on Form 941, Employer’s Quarterly Federal Tax Return. A shortfall in the withheld income tax and employee share is the trust fund amount that section 6672 reaches.

What amount does the section 6672 penalty equal?

The IRS states that the amount of the penalty is equal to the unpaid balance of the trust fund tax: the income tax and employee share of Social Security and Medicare withheld from wages and not paid over. The employer share is not part of it. The IRS collects the trust fund amount once in total, even when it assesses more than one responsible person.

Does Letter 1153 affect the time the IRS has to assess the penalty?

The Internal Revenue Manual connects them. IRM 5.7.4.7 describes Letter 1153 as the 60-day preliminary notice and refers to IRM 5.7.3.7.2, Impact of Letter 1153 on Assessment Statute. The assessment period itself comes from 26 U.S.C. section 6501 (see IRM 5.7.3.6). The account and the notice in hand control.

What does the IRM say about a representative at the Form 4180 interview?

The IRM tells the interviewer to suspend the interview when a potentially responsible person says they wish to consult an authorized representative (IRM 5.7.4.2.3), and to give the representative a copy of the signed Form 4180 when feasible (IRM 5.7.4.2.4). Whether to bring a representative is the person’s decision.

Does the firm handle payroll tax matters for Maryland employers?

Mr. Powell is admitted in Maryland, and the firm represents Maryland employers and responsible persons in IRS payroll tax matters from its Washington, DC office at 1629 K Street NW, Suite 300. Maryland withholding tax is a separate liability collected by the Comptroller of Maryland.

Payroll tax

Washington, DC and Maryland trust fund recovery penalty attorney for payroll tax.

Mr. Powell of the Law Office of Alexander Powell, PLLC handles unpaid payroll taxes and the trust fund recovery penalty under 26 U.S.C. section 6672 for employers and responsible persons in Washington, DC and Maryland. The firm has an office at 1629 K Street NW, Suite 300 in Washington, DC and represents responsible persons and closely held businesses in trust fund recovery penalty matters nationwide. Mr. Powell is admitted in the District of Columbia and Maryland.

Mr. Powell answers the Revenue Officer, prepares the Form 4180 interview, and requests review by the IRS Independent Office of Appeals. The penalty equals the unpaid trust fund taxes, it is joint and several, and Letter 1153 states the window to take the matter to Appeals. The date printed on the notice controls.

The same conduct can carry criminal exposure under 26 U.S.C. section 7202, a felony for a willful failure to collect, or truthfully account for and pay over, the tax, so the matter is triaged for that exposure before anything is said to the IRS.

Federal IRS and Tax Court representation may extend nationwide. State-law matters are limited to the District of Columbia and Maryland.

These sources were checked on October 23, 2026: irs.gov, Internal Revenue Manual 5.7.4, and the Comptroller of Maryland’s Business Tax Tip #10. The statutes were last checked on September 14, 2026. The notice in hand controls.

Start here Call (202) 821-1980

What is the trust fund recovery penalty?

An employer withholds income tax and the employee share of Social Security and Medicare from wages. Those trust fund taxes are held in trust for the United States under 26 U.S.C. section 7501, deposited electronically, and reported each quarter on Form 941. When they are not paid over, section 6672 lets the IRS collect the unpaid trust fund amount personally from a person responsible for paying it over who willfully failed to do so.

The employer share of Social Security and Medicare is not part of the penalty, which is why the IRS figure is usually smaller than the full payroll balance.

Official source: IRS, Employment taxes and the TFRP
Official source: IRS, Depositing and reporting employment taxes
Official source: 26 U.S.C. 6672
Official source: 26 U.S.C. 7501
Official source: 26 U.S.C. 7202

The work

Read the notice.

Read the notice
Identify the tax periods, the trust fund amount, whether the paper is a Form 4180 request or a Letter 1153, and the date on it.
Reconstruct responsibility
Map who had the duty and the power to direct the collecting, accounting, and paying of trust fund taxes.
Weigh willfulness
Review what the person knew, or should have known, about the unpaid taxes and where the funds went.
Protect the appeal right
Calendar the date on Letter 1153 and prepare the protest the letter describes.

The Form 4180 interview.

Form 4180 is the IRS record of a personal interview with a potentially responsible person. Internal Revenue Manual (IRM) 5.7.4.2.4 says the IRS uses the interview to determine whether the person meets the criteria for responsibility and willfulness, and the Revenue Officer reviews all Forms 4180 when deciding both questions for each person (IRM 5.7.4.5).

The IRS defines a responsible person as one who “has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes.” A willful person must have been, or should have been, aware of the outstanding taxes and either intentionally disregarded the law or was plainly indifferent to its requirements. The answers decide those two questions.

A person may consult an authorized representative. When a person says during an interview that they wish to, the IRM tells the interviewer to suspend the interview (IRM 5.7.4.2.3). The IRM refers to Form 2848, Power of Attorney and Declaration of Representative, for a representative who acts for the person (IRM 5.7.4.7). If the firm can consider the matter, Mr. Powell prepares the interview with the person beforehand. This states what the IRM provides, not advice about a particular interview.

Official source: IRM 5.7.4, Investigation and Recommendation of the TFRP
Official source: IRS, Employment taxes and the TFRP

Letter 1153 and the 60-day protest window.

When the Revenue Officer recommends the penalty, the IRS sends Letter 1153 with Form 2751. The IRM describes Letter 1153 as the 60-day preliminary notice that precedes the notice and demand for payment (IRM 5.7.4.7). The IRS states the response period as 60 days, or 75 days if the letter is addressed to the person outside the United States. The date printed on the letter controls.

A person who disagrees can appeal, and the IRS points to Publication 5, Your Appeal Rights and How to Prepare a Protest if You Disagree, for the process. The IRS Appeals page covers review by the IRS Independent Office of Appeals.

Official source: IRS, Employment taxes and the TFRP
Official source: IRM 5.7.4, Investigation and Recommendation of the TFRP

Maryland employers and responsible persons.

Maryland employers and responsible persons are represented from the firm’s Washington, DC office, and Mr. Powell is admitted in Maryland, so a business in Baltimore, Rockville, Bethesda, Silver Spring, Annapolis, or elsewhere in the state has the same IRS representation as any other. Section 6672 is federal, so the IRS procedure is the same.

Maryland withholding tax has its own collection path through the Comptroller of Maryland. Its Business Tax Tip #10 says any officer of a corporation who exercises direct control over its fiscal management is personally liable for withholding tax, penalties, and interest. A Maryland business can owe both, on separate notices with separate dates. Read Comptroller of Maryland collections for liens and levies, and Maryland tax attorney for Comptroller disputes.

Official source: Comptroller of Maryland, Business Tax Tip #10

The District of Columbia has its own personal-liability penalty.

The federal penalty under 26 U.S.C. section 6672 is the IRS’s. This section covers the separate District of Columbia rules for taxes a business does not collect or pay to the District.

Under D.C. Code section 47-4491(a), an officer or director of a corporation, a general partner of a partnership, or a similar principal of a business is liable, in addition to other penalties provided by law, for a penalty equal to the tax, including interest and penalties, not collected or paid to the District of Columbia for which the business is liable under D.C. Code section 47-1812.08 or Chapter 20 of Title 47. The penalty is not imposed unless the Mayor notifies the responsible person in writing by mail at the taxpayer’s last known address, or in person, that the responsible person is subject to an assessment of the penalty, and the notice must be given at least 30 days before the penalty is imposed. If the Mayor finds that collection of the penalty is in jeopardy, this notice requirement does not apply. The penalty is not imposed if reasonable cause in accordance with D.C. Code section 47-4221 is established.

Under D.C. Code section 47-1812.08(f), sums an employer withholds under that section are held in trust by the employer for the District of Columbia. Section 47-4491(a), described above, names officers, directors, general partners, and similar principals. Separately, the Office of Tax and Revenue says the individuals responsible for making financial decisions for the business, such as the corporate officers, bookkeepers, and accountants, may be held personally liable for payment of the unpaid trust fund taxes.

For the District’s own collection work, see DC OTR collections.

The District of Columbia rules in this section were checked on code.dccouncil.gov and otr.cfo.dc.gov on October 11, 2026. The notice in hand controls over this summary.

Official source: D.C. Code section 47-4491, personal liability for failure to collect or pay tax
Official source: D.C. Code section 47-1812.08, withholding
Official source: OTR, enforcement actions

Questions

Common questions.

How do employment tax deposits and Form 941 work?
An employer deposits the income tax it withholds and the employee and employer shares of Social Security and Medicare by electronic funds transfer, on a monthly or semiweekly schedule that Publication 15 explains. EFTPS is one free method. The employer reports wages and taxes each quarter on Form 941, Employer’s Quarterly Federal Tax Return. A shortfall in the withheld income tax and employee share is the trust fund amount that section 6672 reaches.
What amount does the section 6672 penalty equal?
The IRS states that the amount of the penalty is equal to the unpaid balance of the trust fund tax: the income tax and employee share of Social Security and Medicare withheld from wages and not paid over. The employer share is not part of it. The IRS collects the trust fund amount once in total, even when it assesses more than one responsible person.
Does Letter 1153 affect the time the IRS has to assess the penalty?
The Internal Revenue Manual connects them. IRM 5.7.4.7 describes Letter 1153 as the 60-day preliminary notice and refers to IRM 5.7.3.7.2, Impact of Letter 1153 on Assessment Statute. The assessment period itself comes from 26 U.S.C. section 6501 (see IRM 5.7.3.6). The account and the notice in hand control.
What does the IRM say about a representative at the Form 4180 interview?
The IRM tells the interviewer to suspend the interview when a potentially responsible person says they wish to consult an authorized representative (IRM 5.7.4.2.3), and to give the representative a copy of the signed Form 4180 when feasible (IRM 5.7.4.2.4). Whether to bring a representative is the person’s decision.
Does the firm handle payroll tax matters for Maryland employers?
Mr. Powell is admitted in Maryland, and the firm represents Maryland employers and responsible persons in IRS payroll tax matters from its Washington, DC office at 1629 K Street NW, Suite 300. Maryland withholding tax is a separate liability collected by the Comptroller of Maryland.
Is there a District of Columbia version of the trust fund recovery penalty?
Under D.C. Code section 47-4491(a), an officer or director of a corporation, a general partner of a partnership, or a similar principal of a business is liable, in addition to other penalties provided by law, for a penalty equal to the tax, including interest and penalties, not collected or paid to the District of Columbia for which the business is liable under D.C. Code section 47-1812.08 or Chapter 20 of Title 47. The same section sets notice, reasonable-cause, and jeopardy rules, which are described above on this page. The notice in hand controls over this summary.

What may follow a Letter 1153.

Once the penalty is assessed it becomes a personal balance, so the next step is the collection track: IRS collections, IRS levy, and offer in compromise. A timely protest of Letter 1153 is filed with the IRS office that issued it and is forwarded to the IRS Independent Office of Appeals.

If the employment tax returns are not filed, start with unfiled returns.

Send the letter code and the date printed on it.

Tell me which notice you hold (a Form 4180 request, a Letter 1153, or a Comptroller of Maryland withholding notice), the tax periods, and the date printed on it. Send only a high-level summary.

Schedule an initial consultation

Requesting a consultation does not make Mr. Powell your lawyer, provide legal advice, or protect a deadline.

Law Office of Alexander Powell, PLLC. 1629 K Street NW, Suite 300, Washington, DC 20006.