The LTR 1153 is the IRS's proposed assessment of the Trust Fund Recovery Penalty. If you receive this letter, the IRS is telling you they intend to hold you personally liable for unpaid employment taxes. Not the business. You. Personally.
The Trust Fund Recovery Penalty equals 100% of the trust fund portion of unpaid employment taxes. That includes all federal income tax withheld from employees' paychecks plus the employee share of Social Security and Medicare taxes. It does not include the employer share. But 100% of the withheld amounts is still an enormous number for most businesses.
Why It's Called "Trust Fund"
When you withhold taxes from an employee's paycheck, that money belongs to the government. You're holding it in trust until you deposit it. When you fail to deposit it, you've effectively used government money to fund your business operations. The IRS considers this among the most serious tax violations.
Unlike most business tax debts, the trust fund recovery penalty cannot be discharged in bankruptcy. It follows you personally until it's paid or the collection statute expires. And unlike the business entity's tax debt, your personal CSED on the TFRP assessment starts fresh from the date of the personal assessment, not from the date the business return was filed.
Who Gets the Letter
The IRS assesses the TFRP against any "responsible person" who "willfully" failed to collect or remit the trust fund taxes. "Responsible" means you had the authority to decide which creditors to pay. "Willful" means you knew the taxes were due and chose to pay other expenses instead.
Business owners are the most obvious targets, but the IRS can also go after corporate officers, partners, bookkeepers, and anyone else with signature authority on the business bank account who had the power to direct payments. Titles do not decide the question. Authority and knowledge do, so a CFO, controller, or office manager can be in the frame too.
The 60-Day Response Window
The LTR 1153 generally gives you 60 days to protest the proposed assessment, or 75 days if the letter is addressed to you outside the United States. Use the exact date and instructions printed on the letter. If you do not make a timely protest, the IRS may assess the penalty and begin collection.
During the protest period, you can request an Appeals conference and present evidence about responsibility, willfulness, and the trust-fund computation. A focused protest should address the actual decision-making authority and payments for each period.
The Form 4180 Interview
Before issuing the LTR 1153, the IRS typically conducts a Form 4180 interview to determine who was responsible and whether the failure was willful. If you haven't had this interview yet and you receive an LTR 1153, request one immediately. What you say in that interview matters enormously.
Do not attend a Form 4180 interview without representation. Every answer you give becomes evidence. A tax attorney knows which questions to answer carefully, which facts to emphasize, and how to frame your role in a way that supports your defense.
This Is Not a Letter to Handle Alone
The TFRP is one of the most aggressive tools in the IRS's arsenal. The amounts are large, the liability is personal, and the consequences are permanent (it survives bankruptcy). Professional representation isn't a luxury here. It's a necessity.
If you've received an LTR 1153, call us immediately at (813) 229-7100. The protest clock printed on the letter is running and personal liability is at stake.