IRS Letter 1153
We're Proposing to Assess the Trust Fund Recovery Penalty
The IRS wants to hold you personally liable for your company's unpaid payroll taxes.
Deadline
60 days to protest and request an Appeals conference
If you do not respond within 60 days, the Trust Fund Recovery Penalty is automatically assessed against you personally. This becomes a personal tax debt that follows you regardless of what happens to the business.
Act within days — enforcement is imminent or already in progress.
What IRS Letter 1153 Means
Letter 1153 is one of the most serious IRS notices a business owner can receive. It means the IRS is proposing to hold you personally liable for the Trust Fund portion of your company's unpaid payroll taxes under IRC §6672 — the Trust Fund Recovery Penalty (TFRP).
Trust Fund taxes are the portion of payroll taxes that were withheld from employee paychecks (federal income tax, Social Security employee share, Medicare employee share) but never remitted to the IRS. The IRS treats these as funds held in trust for the government — and officers or responsible parties who willfully failed to remit them can be held 100% personally liable.
The TFRP can amount to hundreds of thousands of dollars and follows you personally — it cannot be discharged in bankruptcy, does not disappear if the company closes, and can result in liens on your personal assets and garnishment of your personal wages.
What the IRS Can Do If You Don't Respond
- Assess the TFRP against you personally after 60 days without protest
- Levy your personal bank accounts, wages, and property for the TFRP balance
- File a personal federal tax lien against your property
- Pursue the TFRP regardless of whether the company is still operating
- Assess the TFRP against multiple responsible parties simultaneously (joint and several liability)
What You Should Do Right Now
- 1
Retain a tax professional immediately — the 60-day protest deadline is critical
- 2
File a written protest within 60 days to request an Appeals conference and suspend the assessment
- 3
Document that you were not a 'responsible person' or that your failure to pay was not 'willful'
- 4
Gather evidence of who had authority over company finances, who signed checks, and who made payroll decisions
- 5
If multiple officers received Letter 1153, coordinate with a professional to ensure consistent and correct responses
Resolution Options Available to You
Specialized TFRP defense — dispute responsible person status or willfulness
File a protest and present your case to an independent Appeals Officer
If the TFRP is assessed, explore settlement of the personal liability
Personal payment plan for assessed TFRP if the amount is correct
Frequently Asked Questions About IRS Letter 1153
Who is a 'responsible person' for the Trust Fund Recovery Penalty?
Any person who had the authority and duty to ensure payroll taxes were collected and remitted — typically owners, officers, CFOs, bookkeepers with check-signing authority, or others who controlled company finances. The IRS casts a wide net.
What does 'willful' mean for TFRP purposes?
Willfulness does not require fraudulent intent. It means the responsible person knew about the unpaid payroll taxes and either paid other creditors instead of the IRS or deliberately ignored the tax obligation. This standard is often met even by well-intentioned business owners in financial distress.
Can I avoid the TFRP if my company is already closed?
No. The TFRP follows you personally regardless of whether the company still exists. Closing or bankrupting the company does not discharge the personal liability.
Can the TFRP be discharged in bankruptcy?
No. Trust Fund Recovery Penalties are non-dischargeable in bankruptcy, along with willful tax evasion. This makes TFRP defense critically important — once assessed, the debt is very difficult to eliminate.
Professional References
IRC: IRC §6672 — Failure to Collect and Pay Over Tax — Trust Fund Recovery Penalty
IRM: IRM 5.7 — Trust Fund Compliance
Got IRS Letter 1153? Let's Resolve It.
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