The Internal Revenue Service does not have the resources to audit every single tax return and thus prioritizes its collection efforts. The agency keeps a close eye on the payment of employment taxes withheld from employee paychecks.
When a company does not immediately transfer these funds, also called trust fund payments, to the IRS there are serious consequences. All responsible persons with an ownership interest in or signatory authority for the company can be held liable.
In an effort to encourage prompt payment of these trust fund payments, congress passed the Trust Fund Recovery Penalty. The IRS can assess multiple owners with the 100-percent penalty. Technically any person responsible for collecting or paying withheld income and employment taxes who willfully fails to collect or pay them is liable.