Tax Relief AnswersIRS Letter 1153: Proposed Trust Fund Recovery Penalty
The short answer
Letter 1153 tells you the IRS plans to assess the Trust Fund Recovery Penalty (TFRP) against you personally for payroll or excise taxes a business withheld or collected but did not pay. It comes with Form 2751, Proposed Assessment of Trust Fund Recovery Penalty. The IRS says you have 60 days from the date of the letter (75 days if it is addressed to you outside the United States) to appeal, and the law bars the IRS from demanding payment until at least 60 days after the notice (26 U.S.C. 6672(b)). Sources: IRS, Employment taxes and the TFRP, IRS Publication 594 (Rev. 1-2026) and 26 U.S.C. 6672, checked November 3, 2026. The IRS has no "Understanding your Letter 1153" page.
What Letter 1153 is
| Question | Answer, from the IRS sources and the statute |
|---|---|
| Legal basis | 26 U.S.C. 6672 (penalty on a person who willfully fails to collect or pay over tax) |
| What comes with it | Form 2751, Proposed Assessment of Trust Fund Recovery Penalty |
| Penalty amount | Equal to the unpaid trust fund tax: withheld income tax plus the employee's share of FICA, or unpaid collected excise taxes |
| If you agree | Sign and return Form 2751 within 60 days of the letter date; you may also pay the trust fund taxes personally to avoid the assessment (Publication 594) |
| If you disagree | Publication 594 says you have 10 days from the letter date to tell the IRS you disagree or have more information, and 60 days to appeal |
| Appeal window | 60 days from the letter date, or 75 days if addressed outside the United States (IRS TFRP page) |
| If you do nothing | The IRS assesses the penalty against you personally and starts collection |
| Business still open? | The IRS says the business does not have to have stopped operating for the TFRP to apply |
Who the IRS can hold responsible
The IRS says the TFRP can be assessed against any person who is responsible for collecting or paying the withheld or collected taxes and who willfully fails to do so. Its list includes corporate officers and employees, partners, directors and shareholders, nonprofit board members, payroll service providers and professional employer organizations, and anyone else with authority over which bills get paid. "Willfully" means you knew or should have known about the unpaid taxes and intentionally disregarded the law or were plainly indifferent to it. Using available money to pay other creditors is a sign of willfulness, the IRS says. An employee who only paid bills as directed by a superior is not a responsible person.
Where it sits
Letter 1153 is a proposal, before any assessment. After assessment the IRS says it can file a federal tax lien or levy your personal assets, through the usual collection notices (CP14 through LT11 or Letter 1058).
Steps
- Note the letter date and count the 60 days (75 if mailed abroad); the letter explains your appeal rights.
- Gather records that show your role: who signed checks, who decided which creditors were paid, and when you learned the taxes were unpaid.
- If you disagree, contact the IRS within 10 days of the letter date, as Publication 594 describes, to try to resolve it informally.
- If it is not resolved, file a protest with the IRS Independent Office of Appeals within the deadline, following Publication 5.
- If you agree, sign Form 2751. If you cannot pay the assessed penalty, see IRS payment plans.
Common mistakes
- Assuming the debt belongs only to the company. The penalty is personal.
- Waiting for the business to pay or close. The IRS can assess while the business is still operating.
- Missing the appeal window. Publication 5 says that if you do nothing on a proposed TFRP, the IRS sends you a bill.
- Thinking a job title alone decides responsibility. The IRS looks at your actual duties and authority, and may ask you to complete an interview.
Trust fund cases are fact-heavy. A Low Income Taxpayer Clinic may help if you meet its income limits, and the Taxpayer Advocate Service is free. For paid help, look for a licensed professional (enrolled agent, CPA or attorney) and check the credential first. Not sure the letter is real? See how to check an IRS letter.
FAQ
How long do I have to appeal Letter 1153?
The IRS says 60 days from the date of the letter, or 75 days if the letter is addressed to you outside the United States.
Can the IRS collect the TFRP from my personal assets?
Yes, once the penalty is assessed. The IRS says it can then file a federal tax lien or take levy or seizure action against your personal assets.
How is the Trust Fund Recovery Penalty calculated?
It equals the unpaid trust fund tax: the income tax withheld from employees plus the employees' share of FICA, or the unpaid collected excise taxes.
What happens if I ignore Letter 1153?
Publication 594 says the IRS will assess the penalty against you personally and begin the collection process.