When a letter from the IRS comes to your mailbox, it’s never a pleasant experience. So if you’ve received an IRS Letter 1153 regarding your responsibility to pay a trust fund recovery penalty, keep reading to see if you need a tax lawyer to help you navigate the situation.
What is an IRS Letter 1153?
An IRS Letter 1153 is a notice to you that you owe (or may be responsible for) a trust fund recovery penalty (TFRP).
The IRS can assess a trust fund recovery penalty against a “responsible person” of a business that hasn’t paid their payroll taxes. Payroll tax consists of an employer portion and an employee portion (also known as “trust fund tax”). The employee portion is withheld from employee paychecks and paid over to the IRS on a quarterly basis. If the employer fails to pay over the employee portion to the IRS, the IRS can hold certain persons at the business personally responsible– i.e., a trust fund recovery penalty (TFRP).
The IRS will assign a revenue officer to investigate and figure out who was controlling the finances of the business. That includes interviewing the owners and officers of a business. The revenue officer will also try to determine who had control over the business bank accounts and who at the business was responsible for the payroll tax deposits and returns.
There can be more than one person responsible for paying the payroll taxes. As a result, the IRS can assess a trust fund recovery penalty (TFRP) against more than one person for the same quarter. This is more likely with a large business with multiple officers or owners.
What are my options if I receive an IRS Letter 1153?
If the IRS believes you were responsible for paying the payroll tax of the business, you will receive a Letter 1153 by certified mail. If you receive an IRS Letter 1153, the most straightforward way to resolve the problem is for the business to immediately pay the trust fund tax for each quarter listed on the Letter 1153.
However, if you work for a large business and hundreds of employees’ payroll taxes were not paid in full when they were due, then the business may not be able to immediately pay all the delinquent trust fund tax. If this is the case, then you have 60 days to file an appeal with the IRS in response to the Letter 1153 to prove that you are not responsible for the trust fund recovery penalty (TFRP).
How do I appeal my IRS Letter 1153?
If you need to appeal your IRS Letter 1153, contact a tax attorney to prepare your appeal. The appeal must be in writing and explain why you are not responsible for the trust fund recovery penalty. The appeal will be reviewed by the IRS Office of Appeals and you will generally be given an opportunity for an in-person meeting.
The process is confusing and it’s easy to make a mistake. If your appeal does not contain the right information, it may not be processed. The appeal is your best opportunity to present your case in the best light. An experienced tax attorney can help you do this by preparing the appeal and arguing your case before the IRS Office of Appeals.
Need help with your IRS Letter 1153?
You shouldn’t try to navigate handling your IRS Letter 1153 on your own. Contact Mindy Meigs expert tax attorney to tackle every step of your appeal.