Letter 1153 Help
Letter 1153 Help — IRS Trust Fund Recovery Penalty
Received Letter 1153? The IRS Is Pursuing Personal Liability for Payroll Taxes
Letter 1153 is a Proposed Trust Fund Recovery Penalty (TFRP) assessment. It means the IRS believes you are a “responsible person” for a business that failed to collect, account for, or pay over federal payroll taxes — specifically, the employee portion of FICA and income tax withholding. The Trust Fund Recovery Penalty allows the IRS to assess these taxes against you personally, not just your business, making your personal assets — including bank accounts, savings, and real estate — potentially subject to levy. You have 60 days to respond, and the appeal window is your strongest line of defense.
What’s in a Letter 1153
- The specific payroll tax periods and the dollar amount of the proposed penalty
- The IRS’s determination that you are a responsible person who willfully failed to pay over trust fund taxes
- A 60-day window to protest the proposed assessment through the IRS Independent Office of Appeals
- Notice that if no appeal is filed, the penalty will be assessed and collection will begin
Your Options When You Receive a Letter 1153
File an Appeal Within 60 Days — This is your most important option. An Appeals conference gives you the opportunity to present facts and arguments about whether you actually meet the legal definition of a “responsible person” and whether your failure to pay was “willful.” Many TFRP cases are reduced or dismissed at Appeals.
Dispute Responsible Person Status — Not every officer, owner, bookkeeper, or authorized signatory is automatically a responsible person under the law. The IRS must establish both that you had authority over finances and that your failure to pay was willful. We analyze the facts of your specific role in the business and build a case accordingly.
Negotiate a Resolution — If the penalty is ultimately upheld, the IRS will work with individual taxpayers on installment agreements and, in some cases, Offers in Compromise for the assessed TFRP amount.
Assert Payment Allocation Defenses — In some cases, the order in which payments were made to creditors — or the nature of funds used for other payments — can affect the TFRP calculation and your exposure.
Your Personal Assets Are at Risk
The Trust Fund Recovery Penalty completely bypasses corporate or LLC liability protections. Once assessed, the IRS can file a federal tax lien against your personal property and pursue levy against your personal bank accounts and wages. This is not a business problem — it is a personal one. The 60-day protest window in Letter 1153 is the point at which you have the most leverage. At HofflerSmith Financial, our Enrolled Agents handle TFRP cases regularly and know exactly how to challenge the IRS’s responsible person determination.