According to the IRS, "To encourage prompt payment of withheld income and employment taxes, including social security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP, Trust Fund Recovery Penalty.

These taxes are called trust fund taxes because you actually hold the employee's money in trust until you make a federal tax deposit in that amount. The TFRP may apply to you if these unpaid trust fund taxes cannot be immediately collected from the business. The business does not have to have stopped operating in order for the TFRP to be assessed."

The Trust Fund Recovery Penalty (the 100% penalty) is authorized under section 6672 of the Internal Revenue Code. The IRC Section 6672(a) provides that, "any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over."

Which Person Can Be Responsible for the TFRP?
The TFRP may be assessed "against any person who is either is responsible for collecting or paying withheld income and employment taxes, or for paying collected excise taxes, and willfully fails to collect or pay them."

Per the IRS. "a responsible person is a person or group of people who has the duty to perform and the power to direct the collecting, accounting, and paying of trust fund taxes. This person may be:

1. an officer or an employee of a corporation,
2. a member or employee of a partnership,
3. a corporate director or shareholder,
4. a member of a board of trustees of a nonprofit organization,
5. another person with authority and control over funds to direct their disbursement, or
6. another corporation."

According to the IRS, for willfulness to exist, the responsible 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 (no evil intent or bad motive is required). Now, if a taxpayer uses existing funds to pay other creditors when the business is unable to pay the employment taxes is an indication of willfulness.

How does the IRS calculate the TFRP Amount?
Per the IRS, the amount of the penalty is equal to the unpaid balance of the trust fund tax. The penalty is computed based on the following;

1. The unpaid income taxes withheld, plus
2. The employee's portion of the withheld FICA taxes.

For collected taxes, the penalty is based on the unpaid amount of collected excise taxes.

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Thanks for sharing a very useful information there on this thread.

Really useful and value able information shared by you.
The Trust Fund Recovery Penalty (TFRP) is a penalty against any person required to collect, account for, and pay over taxes held in trust who willfully fails to perform any of these activities. The TFRP may be imposed for:
Willful failure to collect tax,
Willful failure to account for and pay tax, or
Willful attempt in any manner to evade defeat tax or the payment thereof..!!