Glossary term
Letter 1153
Letter 1153 is an IRS notice proposing a trust fund recovery penalty and explaining the recipient's appeal rights.
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What Is Letter 1153?
Letter 1153 is an IRS notice used to propose a trust fund recovery penalty against an individual. The letter tells the recipient that the IRS believes they may be personally liable for certain unpaid trust fund taxes, usually payroll taxes withheld from employees but not paid to the government.
The letter is not the same as an ordinary tax bill. It is a proposed penalty notice with appeal rights. The recipient generally has a limited time to agree, protest, or otherwise respond before the IRS can move toward assessment.
Key Takeaways
- Letter 1153 proposes a trust fund recovery penalty.
- It is directed to a potentially responsible person, not just the business.
- The notice is commonly paired with Form 2751.
- The recipient has appeal rights and a response deadline.
- Ignoring the letter can allow the proposed penalty to become assessed personally.
How Letter 1153 Works
Before issuing Letter 1153, the IRS usually investigates responsibility and willfulness. That investigation may include interviews, records review, bank-signature authority, payroll decision-making, officer status, and who decided which creditors were paid.
If the IRS decides to propose the penalty, Letter 1153 notifies the individual. If the person agrees, they may sign Form 2751. If they disagree, they may submit a protest within the required response period and seek review through IRS Appeals.
What the Letter Signals
Item | Meaning |
|---|---|
Proposed penalty | The IRS has not merely sent a general inquiry; it is proposing personal liability. |
Responsible person issue | The IRS believes the recipient may have had authority over payroll tax decisions. |
Willfulness issue | The IRS is evaluating whether required taxes were knowingly not paid. |
Form 2751 | Agreement form for the proposed assessment. |
Appeal rights | The recipient can challenge the proposal within the response window. |
Response and Documentation
Letter 1153 should be treated as time-sensitive. The practical response usually starts with reviewing the tax periods, unpaid amounts, business records, bank authority, job duties, payroll controls, and the facts the IRS used to identify the recipient as responsible.
The letter can be especially serious for people who were involved in a business but did not think they personally owed its payroll taxes. The TFRP rules can look past the entity when trust fund taxes were withheld and not paid.
The Bottom Line
Letter 1153 is the IRS notice that a trust fund recovery penalty is being proposed against an individual. It matters because it starts a high-stakes response window before unpaid payroll withholding can become personal tax liability.