What is IRS Letter 1615?

IRS Letter 1615 is the formal notice that the IRS is proposing to assess the Trust Fund Recovery Penalty (TFRP) against you personally under IRC §6672. The TFRP holds individuals PERSONALLY liable for the trust fund portion of unpaid payroll taxes — specifically, the federal income tax withholding, Social Security tax, and Medicare tax that the employer withheld from employees' paychecks but failed to remit to the IRS. The TFRP can be assessed against any 'responsible person' who was required to collect, account for, and pay over these taxes and who 'willfully' failed to do so. Letter 1615 gives you: the right to appeal the proposed assessment through IRS Appeals, the right to protest the TFRP determination, and typically 60 days to respond before the penalty is assessed.

Who is a 'responsible person' for TFRP purposes?

A 'responsible person' under §6672 is anyone with significant control over the company's financial decision-making — who decides which creditors get paid. This can include: officers, directors, shareholders, partners, members of an LLC, employees with check-signing authority, controllers, bookkeepers who decide which bills to pay, and even non-employees (outside accountants, lenders) who effectively control which creditors are paid. You don't need to be an owner to be a responsible person. You don't need to have signed the payroll tax returns. You don't need to have known the taxes weren't being paid if you had the authority to find out and chose not to. Multiple people can simultaneously be responsible persons — the IRS can assess the TFRP against ALL of them, collecting the total only once, but pursuing each person until the full amount is collected.

What does 'willful failure' mean under §6672?

Willfulness under §6672 has a broader meaning than in criminal law. It does NOT require a bad motive or intent to defraud. You acted willfully if you: (1) knew the taxes were unpaid and paid other creditors instead, (2) acted with reckless disregard of whether taxes were paid — including failing to investigate after learning of potential non-payment, (3) delegated the responsibility but failed to monitor — you cannot avoid liability by simply delegating payroll tax duties to someone else without oversight. The classic scenario: a struggling business pays suppliers, rent, and even your own salary before paying withheld payroll taxes. That is a willful failure.

How do I appeal a Letter 1615 TFRP proposed assessment?

Letter 1615 includes instructions for requesting an appeal (protest). Generally: (1) File a written protest within the timeframe specified (typically 30-60 days) to the address shown on the letter. (2) The protest should state that you disagree with the proposed TFRP, explain why you are not a responsible person or why your failure was not willful, and include supporting documentation. (3) You can request an Appeals conference — an independent IRS Appeals officer reviews your case. (4) Common defenses: you were not a responsible person (someone else controlled which bills were paid), your failure was not willful (you reasonably relied on a professional or were unaware of the non-payment despite reasonable diligence), or the trust fund portion has already been paid (by the company or another responsible person). (5) If Appeals sustains the TFRP, you can pay a divisible portion (the tax for one employee for one quarter — as little as a few hundred dollars) and sue for refund in federal court.

What are the consequences of TFRP assessment?

If the TFRP is assessed against you: (1) the penalty becomes a personal liability — it cannot be discharged in bankruptcy (it survives Chapter 7, Chapter 13), (2) the IRS can levy your wages, bank accounts, retirement accounts, and personal assets immediately after assessment, (3) a Notice of Federal Tax Lien can be filed against all your property, (4) the Collection Statute Expiration Date (CSED) runs 10 years from assessment, (5) the TFRP accrues interest from the date of assessment, (6) failure-to-pay penalties also apply (0.5% per month, up to 25%). The TFRP is one of the most aggressive IRS collection tools — it converts a corporate tax into personal debt that follows you for a decade.

Business owner facing TFRP proposed assessment

TFRP Proposed Assessment — Personal Liability

IRS Letter 1615: TFRP Proposed Assessment

The IRS is proposing to hold you PERSONALLY liable for unpaid payroll taxes. This penalty can follow you for 10 years, cannot be discharged in bankruptcy, and can be assessed against multiple people. You have the right to appeal — act before your time runs out.

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What the TFRP Means for You Personally

The Trust Fund Recovery Penalty converts corporate payroll tax debt into your PERSONAL liability. If the IRS assesses the TFRP: your personal assets — your house, your savings, your retirement, your future wages — are all exposed. The penalty equals 100% of the trust fund portion (the income tax, Social Security, and Medicare tax withheld from employees). The company's portion (employer FICA) is NOT included in the TFRP. For a business with 10 employees and $70,000 in quarterly payroll, the TFRP can easily exceed $25,000-$35,000 — and you're personally on the hook for every dollar.

Defenses Against TFRP Assessment

Not a Responsible Person

You did not have significant control over which creditors were paid. Someone else made those decisions without your authority to override.

Not Willful

You had no knowledge of the unpaid taxes and exercised reasonable diligence to ensure compliance — or you relied reasonably on a competent professional.

Delegated with Oversight

You delegated payroll responsibilities to a qualified person and had reasonable monitoring procedures in place to ensure compliance.

Involuntary Payment

You were ordered by a superior (e.g., company owner, controlling shareholder) to pay other creditors and had no power to pay the taxes instead regardless of your title.

Duress / Threats

You acted under threat of termination or other adverse action by the actual decision-maker if you paid taxes before other creditors.

Trust Fund Already Paid

The trust fund portion has already been satisfied — by the company, bankruptcy trustee, or another responsible person assessed the TFRP.

Frequently Asked Questions

I was just the bookkeeper — can the IRS really come after me?

Yes, if you had authority to sign checks and decide which bills to pay, you may qualify as a responsible person even if you had no ownership stake. The test is control over financial decisions, not title or ownership. However, bookkeepers who merely processed checks at the direction of the owner (without independent authority to decide who got paid) generally are NOT responsible persons.

Can the IRS assess TFRP against multiple people for the same tax?

Yes. The IRS can assess the TFRP against every responsible person. It can only COLLECT the amount once, but it can pursue every responsible person until the full amount is collected. This means the IRS might levy your wages while also levying the other officer's bank accounts — and whoever pays first reduces the total that can be collected from others.

Can I discharge TFRP in bankruptcy?

No. The TFRP is a non-dischargeable tax debt under §523(a)(1)(A) of the Bankruptcy Code — it survives both Chapter 7 and Chapter 13 bankruptcy. Even after bankruptcy discharge, the IRS can continue to collect the TFRP from you.

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