The LTR 3586 is a request to schedule a Form 4180 interview. This is the interview where the IRS determines who was a "responsible person" who "willfully" failed to collect or pay over trust fund taxes. The answers you give in this interview directly determine whether you're personally assessed with the Trust Fund Recovery Penalty.
Do not attend this interview without representation. That is not a suggestion. It is the most important piece of advice in this article.
What the IRS Is Trying to Determine
The IRS needs to establish two things to assess the TFRP against you. First, that you were a "responsible person." This means you had the duty to collect, account for, and pay over the trust fund taxes. Second, that your failure was "willful." This means you knew or should have known that the taxes were due and you chose to pay other expenses instead.
The Form 4180 interview asks detailed questions about your role in the business. Who signed checks? Who authorized payroll? Who decided which creditors to pay? Who had access to the bank accounts? Who was aware that employment taxes weren't being deposited? Every answer is evidence.
How to Prepare
Before the interview, review the business's financial records for the periods in question. Understand the timeline of when taxes were due, when they should have been deposited, and what happened to the money. Identify any circumstances that support your defense: were you out of the country, were you excluded from financial decisions, did someone else control the checkbook?
Your tax attorney will review the Form 4180 questions with you in advance, help you prepare accurate answers that don't create unnecessary liability, and identify the strongest arguments for why you either weren't a responsible person or your failure wasn't willful.
What Not to Say
Don't speculate. If you don't remember something, say so. Don't guess about dates, amounts, or who made specific decisions. Don't volunteer information about other people in the business unless asked. Don't minimize your role but don't overstate it either. Stick to facts you're certain about.
The most damaging answer in a Form 4180 interview is admitting you knew taxes were due and chose to pay rent or vendors instead. That establishes willfulness in one sentence. Even if it's true, how you frame the circumstances matters enormously for whether the IRS ultimately assesses the penalty or exercises discretion.
After the Interview
If the IRS determines you're a responsible person, they'll issue an LTR 1153 proposing the TFRP assessment. You'll have 60 days to appeal. If the interview goes well and the IRS determines you weren't a responsible person or that your failure wasn't willful, no penalty is assessed against you personally.
If you've received an LTR 3586, call us immediately at (813) 229-7100. This interview is too important to walk into unprepared.