IRS Letter 1153: The Proposed Trust Fund Recovery Penalty
Letter 1153 is the written notice 26 U.S.C. § 6672(b) requires before the IRS assesses the trust fund recovery penalty (TFRP) against a person it considers responsible for, and willful in, unpaid withheld payroll taxes. The penalty equals the unpaid trust fund tax. The IRS allows 60 days to protest, or 75 days if the letter is addressed outside the United States.
The IRS has no “Understanding your Letter 1153” page, so this guide works from the IRS TFRP page, Publications 5, 15 and 594, the Internal Revenue Manual and the statute.
Deadline to know: The IRS TFRP page gives 60 days to appeal the proposal, or 75 days if the letter is addressed outside the United States. IRM 5.7.6.2 counts from mailing or personal delivery and treats a protest postmarked or sent by certified or registered mail by the last day as timely.
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What Letter 1153 is, and what comes before it
IRM 8.25.1.4 calls Letter 1153 the “60-Day Notice of Proposed Assessment,” required before any TFRP is assessed. It is the notice § 6672(b)(1) demands: written word, by mail or in person, that the person “shall be subject to an assessment of such penalty.” Publication 594 says Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, comes with it.
The Form 4180 interview
Under IRM 5.7.4.2.4, Form 4180 is the revenue officer’s record of a personal interview about responsibility and willfulness. It is not mailed out for self-completion: it is done in person or by phone, signed by both sides, and a copy goes to the person when feasible. Each interviewee receives Notice 784 (IRM 5.7.4.2.3).
The Form 4183 recommendation
Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment, goes to the group manager (IRM 5.7.4.2) and gives reasons for or against the penalty for each person considered (IRM 5.7.4.5). Under IRM 5.7.4.7, Letter 1153 issues only after approval, by hand or certified mail (registered mail abroad), with the penalty computation pages.
Trust fund taxes and the 100% penalty
Under § 7501(a), withheld tax is “a special fund in trust for the United States.” The IRS trust fund taxes page names withheld income tax and the employee share of Social Security and Medicare tax; the TFRP page adds collected excise taxes.
Section 6672(a) sets the penalty “equal to the total amount of the tax” not collected or paid over. Publication 15 (2026) calls it “100% of the unpaid trust fund tax,” and the TFRP page computes it from withheld income tax plus “the employee’s portion of the withheld FICA taxes.”
- An open business is no bar. The TFRP page says the business “does not have to have stopped operating.”
- Interest. Notice 784 says interest is charged on the penalty (see also IRM 5.7.7.4).
- Scope. 26 CFR 301.6672-1 limits it to taxes imposed on someone other than the collector.
How the IRS describes “responsible” and “willful”
IRM 5.7.3.4 says both elements must be established. The IRS sources word them differently:
| Element | IRS TFRP page and IRM 5.7.3 | Publication 15 and Notice 784 |
|---|---|---|
| Responsible | The “duty to perform and the power to direct” collecting, accounting for and paying the taxes; “a matter of status, duty, and authority” | Officers, employees, partners, an accountant, a volunteer director or trustee, or anyone who signs checks or can cause business funds to be spent |
| Willful | Aware, or should have been aware, of the unpaid taxes, and intentionally disregarded the law or was plainly indifferent; “no evil intent or bad motive is required” | “Voluntarily, consciously, and intentionally”; Notice 784 treats paying other expenses, including net payroll, instead of trust fund taxes as willful |
IRM 5.7.3.4.1 looks at by-laws, check signing, hiring and firing, choosing which creditors get paid, signing Form 941 and making deposits. The TFRP page says an employee who only paid bills “as directed by a superior” is not responsible. Under IRM 5.7.3.4.2, failing to correct mismanagement after learning of unpaid withholding satisfies willfulness.
Publication 15 lists volunteer directors, yet § 6672(e) exempts an unpaid, honorary board member of a tax-exempt organization who stays out of operations and lacks actual knowledge, unless no one else would be liable.
Weighing a protest of a proposed TFRP?
An attorney can review the letter, the interview record and the appeal or refund routes that fit the facts.
Agree, protest, or say nothing
IRM 5.7.6.2 names those three responses. Section 6672(b)(2) requires the notice to precede any notice and demand by “at least 60 days”; the 75-day period comes from the TFRP page and the IRM, not the statute’s text.
Signing Form 2751
Signing agrees to the assessment; IRM 5.7.6.3 has the IRS send Letter 1155 and request full payment. The signature is not final until the 60 or 75 days plus five days pass, and “does not extinguish” appeal rights (IRM 5.7.4.7). Publication 594 adds that paying the trust fund taxes personally also avoids assessment.
Protesting to Appeals
The letter invites contact with the revenue officer within 10 days (from the letter date in Publication 594, from delivery in IRM 5.7.6.4). That contact, like Fast Track Mediation (Publication 3605), does not replace the written appeal due within the 60 or 75 days. The form depends on the amount:
- Small case request. Allowed when each period is $25,000 or less (Publication 5, IRM 8.25.2.3.3.2). It asks for a conference and lists disputed issues with reasons (IRM 5.7.6.5).
- Formal written protest. Required for all periods once any period exceeds $25,000; IRM 5.7.6.4 also counts the sum of all periods, so the IRM sections differ. It lists the Form 2751 periods and carries a penalties of perjury declaration (IRM 5.7.6.6).
A timely protest counts even if incomplete (IRM 5.7.6.7). These appeals usually involve responsibility, willfulness or the computation (IRM 5.7.6.4), and Appeals “does not consider collectibility” (IRM 8.25.1.4).
No response
After the period plus five days the case is “unagreed” (IRM 5.7.6.2.1). The TFRP page says the IRS then assesses, sends a Notice and Demand for Payment, and can file a federal tax lien or levy personal assets. IRM 5.7.6.2.1 lists a pre-assessed installment agreement or currently not collectible status as possible outcomes of a financial analysis.
After assessment: a divisible payment and a refund claim
IRM 8.25.1.7.4.2 calls the TFRP “divisible,” so full payment is not needed to reach a district court or the Court of Federal Claims. Under IRM 5.7.7.5, the person pays the portion for one employee per period and files a separate Form 843 for each, generally within two years of payment; the government counterclaims for the rest. Publication 5 gives the general rule of review “only after you have fully paid”; the IRM treats the TFRP as an exception.
- Timing of suit. A claim not acted on in six months may go to court (IRM 5.7.7.5.1). Letter 3784, a denial, allows 30 days to request Appeals and two years to sue.
- Bond route, § 6672(c). Paying the minimum, claiming a refund and posting a bond of 1½ times the unpaid excess within 30 days after notice and demand bars levy while the case proceeds, if suit follows within 30 days of a denial (Letter 3783).
- During a refund suit. IRM 5.7.7.5.2 says IRC 6331(i) generally bars new levies on the amounts in suit for periods beginning after 1998, and that jeopardy permits immediate collection even when § 6672(c) is met.
When more than one person is held responsible
IRM 8.25.1.4.1 says each responsible person is assessed separately for each quarter, the IRS “does not divide the assessments,” and the full amount may be collected from any one of them, though the total is collected only once.
Section 6672(d) gives a right of contribution: a person who paid more than a “proportionate share” may recover the excess from others liable for the same penalty. That claim must be brought in a separate proceeding, not joined with a federal collection action or counterclaim. Under § 6103(e)(9), an assessed person can get limited information about others assessed for the same tax (IRM 5.7.7.4.1). IRM 8.25.2.4.4 says voluntary payments can be designated to trust fund taxes only at the time of payment.
The time limit on assessment
Section 6501(a) sets a 3-year assessment period from filing, and § 6501(b)(2) treats employment and withholding tax returns for a period within a calendar year, filed before April 15 of the next year, as filed on that April 15. IRM 5.7.3.6 applies this to the TFRP: three years from the following April 15 or the filing date, whichever is later. With no return filed, § 6501(c)(3) sets no limit.
Under § 6672(b)(3), a Letter 1153 sent before the period ends keeps it open until the later of 90 days after the notice or, with a timely protest, 30 days after the final administrative determination. IRM 8.25.2.3.1 says an assessment made without a prior Letter 1153 “is invalid and must be abated.” A Form 2750 waiver binds only its signer, who must be told of the right to refuse or limit it, as IRM 5.7.3.7.1 says § 6501(c)(4) requires.
When an attorney matters
Publication 5 lets a person appear at Appeals alone or appoint someone authorized to practice there, “such as an attorney, certified public accountant, or enrolled agent,” using Form 2848. For a TFRP, the power of attorney must cover the responsible person, “not the business entity” (IRM 5.7.6.6). The roles differ in a few places:
- Criminal exposure. Publication 594 says unpaid employment tax matters may be referred to the Department of Justice for civil collection or criminal prosecution. Section 7525 extends attorney-style confidentiality to CPAs and enrolled agents only in noncriminal tax matters.
- Federal court. The refund route runs to a U.S. district court or the Court of Federal Claims, and Publication 5 says some employment tax cases “can only be heard by these courts.”
- Cost. Publication 5 says a Low Income Taxpayer Clinic may represent eligible taxpayers.
The attorney vs CPA vs enrolled agent comparison covers the roles; the IRS notices hub lists other letters.
Related guides
Frequently Asked Questions
How long is there to respond to Letter 1153?
The IRS TFRP page and IRM 5.7.6.2 give 60 days, or 75 days if the letter is addressed outside the United States, counted in the IRM from mailing or personal delivery.
Does signing Form 2751 give up the right to appeal?
No. IRM 5.7.4.7 says a signed Form 2751 is not a conclusive waiver until the 60 or 75 days, plus five days, pass, and the signature does not extinguish appeal rights.
Can the penalty be proposed while the business is still open?
Yes. The IRS TFRP page says the business does not have to have stopped operating, and Publication 594 says the penalty may be assessed regardless of whether the company is still in business.
Does the whole penalty have to be paid before going to court?
Not for this penalty, which IRM 8.25.1.7.4.2 calls divisible. A Form 843 refund claim needs payment of one employee’s portion for each period.
If several people are assessed, is the penalty collected more than once?
No. IRM 8.25.1.4.1 says the full amount may be collected from any one responsible person, but the total is collected once. Section 6672(d) lets an overpaying person seek contribution from the others.
Review a Letter 1153 while the protest window is open
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Ray Neu
Ray Neu is the publisher of IRSAttorneys.net. A former law enforcement officer with a background in criminal justice and digital publishing, he oversees editorial direction, partnership standards, and compliance review for the site. He is not an attorney and does not provide legal advice; all tax law content is sourced and reviewed against the standards documented on the Editorial Team & Standards page.
Sources
- IRS: Employment taxes and the TFRP
- IRS: Trust fund taxes
- 26 U.S.C. § 6672, Failure to collect and pay over tax
- 26 U.S.C. § 7501, Liability for taxes withheld or collected
- 26 U.S.C. § 6501, Limitations on assessment and collection
- 26 U.S.C. § 7525, Confidentiality privileges
- 26 CFR 301.6672-1
- IRM 5.7.3, Responsibility and Willfulness
- IRM 5.7.4, Investigation and Recommendation of the TFRP
- IRM 5.7.6, Trust Fund Penalty Assessment Action
- IRM 5.7.7, Payment Application and Refund Claims
- IRM 8.25.1, TFRP Overview and Authority
- IRM 8.25.2, Working TFRP Cases in Appeals
- IRS Publication 5, Your Appeal Rights
- IRS Publication 15 (2026)
- IRS Publication 594, The IRS Collection Process
- IRS Notice 784
- Instructions for Form 843
- IRS: About Form 2848, Power of Attorney
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