IRS Letter 3391
We Changed Your Employment Tax Return (Form 941)
The IRS found a discrepancy in your payroll tax return and assessed an additional balance.
Deadline
Respond within the timeframe on the notice — typically 30–60 days
Unresolved payroll tax balances are among the most aggressively collected IRS debts. They can lead to Trust Fund Recovery Penalty assessments against individual officers.
Respond promptly to protect your options and avoid escalation.
What IRS Letter 3391 Means
Letter 3391 means the IRS made an adjustment to your Form 941 (Employer's Quarterly Federal Tax Return) and the adjustment resulted in an additional balance due. Common causes include discrepancies between W-2 totals and 941 filings, incorrect credit claims (such as the Employee Retention Credit), or miscalculation of payroll tax deposits.
Payroll taxes are among the IRS's highest enforcement priorities. Unlike income tax, payroll taxes include a 'trust fund' component — money withheld from employees that the IRS treats as held in trust. Failure to resolve payroll tax balances quickly can lead to Trust Fund Recovery Penalty (TFRP) assessments against business owners personally.
Letter 3391 may also be a precursor to a more comprehensive payroll tax examination (Form 941 audit) if the IRS identifies systemic issues.
What the IRS Can Do If You Don't Respond
- Assess the adjusted payroll tax balance immediately
- Initiate Trust Fund Recovery Penalty investigation against responsible persons
- Levy business assets for the payroll tax balance
- File a federal tax lien on business property
- Assign a Revenue Officer for accelerated collection of payroll tax debt
What You Should Do Right Now
- 1
Compare the IRS adjustment to your original 941 and payroll records
- 2
If incorrect, dispute immediately with documentation (payroll journals, W-2 data, deposit records)
- 3
If correct, pay or establish a business installment agreement immediately
- 4
Monitor for Letter 1153 (TFRP proposal) — payroll tax balances often lead to personal liability
- 5
Consult a CPA or EA who specializes in payroll tax defense
Resolution Options Available to You
Frequently Asked Questions About IRS Letter 3391
Is a 941 balance the same as a Trust Fund Recovery Penalty?
No. The 941 balance is the entity's liability. The TFRP is the separate personal liability assessed against individuals. If a 941 balance goes unpaid, the TFRP follows against responsible persons. Resolving the 941 balance prevents the TFRP from being assessed.
What if I claimed the Employee Retention Credit (ERC) and the IRS is adjusting it?
ERC adjustments are common and complex. If you claimed ERC and the IRS is adjusting your 941, you need professional representation to defend the credit claim or determine if it was properly calculated.
Professional References
IRC: IRC §3111 — Employer FICA; IRC §6672 — TFRP; IRC §941 Return Requirements
IRM: IRM 5.7 — Trust Fund Compliance; IRM 4.23 — Employment Tax Examinations
Got IRS Letter 3391? Let's Resolve It.
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