What CP15B means
CP15B is the IRS telling you that it has charged you, personally, with the Trust Fund Recovery Penalty. The IRS describes it as a penalty for willfully failing to collect, account for, pay over, or otherwise evade paying employment or excise taxes. The IRM calls it the Civil Penalty Notice for Trust Fund Recovery Penalty.
This is not a proposal. The assessment is done. The notice explains the amount due, the due date, and how to pay.
The penalty equals the unpaid trust fund tax. Trust fund taxes are the amounts a business withholds from employees, such as income tax withholding and the employee share of Social Security and Medicare, plus certain collected excise taxes. The business held that money for the government. When it was not paid over, Congress allowed the IRS to collect it from the people responsible.
Why you got it
IRC 6672(a) makes a person liable when that person was required to collect, truthfully account for, and pay over the tax, and willfully failed to do so. In practice the IRS looks for two things: responsibility and willfulness. Responsibility means you had the authority to decide which bills got paid. Willfulness means you knew the taxes were unpaid and chose to pay other creditors instead.
Before a CP15B, the law requires a warning. IRC 6672(b) says no penalty may be imposed unless the IRS first notified you in writing, and that notice must come at least 60 days before notice and demand. That preliminary notice is usually Letter 1153. If you never received a Letter 1153 or an in-person notice, say so early. Whether the IRS met that requirement is a legitimate question.
The deadlines on a CP15B
Two dates matter.
The first is the payment date on the notice. Interest keeps running on any unpaid balance after that date, and the IRS will move the account through its normal collection process.
The second is less obvious. IRC 6672(c) gives you a way to stop collection while you contest the penalty, but only if you act within 30 days after notice and demand. Within that window you must make the minimum payment needed to start a court case, file a claim for refund of that payment, and post a bond equal to 1.5 times the unpaid penalty. Do all three and the IRS cannot levy or sue to collect the rest until the case is resolved, as long as you then follow through in court.
Most people miss the 30-day bond window because nobody tells them it exists. It is in the statute.
How to contest an assessed TFRP
Once the penalty is assessed, the fight usually happens through a refund claim. The IRS page for CP15B lays out the steps:
- Make a divisible payment. For an employment tax penalty, pay the portion attributable to one employee's withheld tax for each quarter at issue. For an excise tax penalty, pay the portion attributable to one transaction for each quarter.
- File Form 843. Submit a Claim for Refund and Request for Abatement for each quarter.
- Add the bond if you want collection stayed. Without the bond, the IRS can keep collecting the balance while your claim is pending.
If the IRS denies the claim, IRC 6672(c)(2) requires you to begin a suit in U.S. District Court or the Court of Federal Claims within 30 days after the denial to keep the bond protection in place. If you don't, the IRS can resume collection.
The payment amount for one employee per quarter is usually far smaller than the full penalty. That is the point of the divisible tax rule. It lets you get into court without paying everything first.
If you agree, or cannot fight it
Pay by the due date if you can. If you cannot, the IRS page says you can apply for a payment plan, and it lists Form 9465 among its resources. A TFRP balance is your personal tax debt, so the same collection alternatives available for an individual balance may apply: installment agreements, offers in compromise, or a hardship status if your finances justify it.
The IRS lists Publication 594, The IRS Collection Process, and Notice 746, Information About Your Notice, Penalty and Interest, as references for this notice. Read them before you call. They explain what happens to an unpaid assessed balance and how interest is figured.
What to do now
- Match each quarter on the CP15B to the business's Forms 941 or 720 and its payment history.
- Find your Letter 1153 or other preliminary notice and note the date you received it.
- Decide within days, not weeks, whether you will contest. The 30-day bond window starts with notice and demand.
- If you are contesting, calculate the one-employee or one-transaction amount for each quarter and prepare Form 843.
- If you are paying over time, request the plan before the account escalates.
What not to do
Do not assume your title protects you. A person without the title of president can still be responsible, and a person with the title is not automatically liable. The facts about who controlled the checkbook decide it.
Do not assume the business's bankruptcy or closure makes this go away. The penalty is assessed against you individually.
Do not wait for a second notice before deciding. By then the bond window may have closed.
More than one responsible person
The IRS can assess the penalty against several people for the same unpaid taxes. That can feel unfair when you were the one who tried to keep the business alive. IRC 6672(d) gives a person who paid more than a proportionate share a right to recover the excess from others who are liable, but that claim must be brought in a separate proceeding. It is not a defense to the IRS's collection.
The law behind CP15B
IRC 6672(a) imposes the penalty. IRC 6672(b) requires written preliminary notice at least 60 days before notice and demand. IRC 6672(c) sets out the payment, claim, and bond procedure that stays collection, and the 30-day deadline to sue after a claim denial. IRC 6672(d) provides the right of contribution. IRM 21.3.1.6.11.1 describes how the IRS handles CP15B contacts, including referring disputes about responsibility.
A CP15B is a personal liability notice with real deadlines. If you want help deciding whether to contest, pay, or negotiate, call us at (813) 229-7100.