[Date]
[Revenue officer name and ID number]
Internal Revenue Service
[Address shown on Letter 1153]
[Fax, if the letter or the RO gave one]
Re: Formal written protest of proposed trust fund recovery penalty
Responsible person named in Letter 1153: [Client name]
Address: [Address] SSN: [SSN] Daytime telephone: [Phone]
Letter 1153 dated [Date on the letter], [hand delivered on [date] / received by certified mail on [date]] (copy enclosed)
Business: [Employer legal name], EIN [EIN]
Tax periods on Form 2751: [List each Form 941 (or 944, 943, 945) period and the proposed amount]
Dear [Revenue officer name]:
[Client name] (the taxpayer) protests the proposed assessment of the trust fund recovery penalty under IRC 6672 described in Letter 1153 and Form 2751, and requests a conference with the IRS Independent Office of Appeals. This protest is submitted in duplicate within [60 / 75] days of the [mailing / delivery] of Letter 1153, by [certified mail no. [number] / fax to the number provided by the revenue officer] on [Date]. The taxpayer does not sign Form 2751.
Issues in dispute
- The taxpayer was not a responsible person for [all periods / the periods [list]].
- Any failure to pay over was not willful for [all periods / the periods [list]].
- [The taxpayer assumed control after the periods [list] accrued and is not liable for them under Slodov v. United States, 436 U.S. 238 (1978). Delete if not applicable.]
- [The proposed amounts are overstated. Delete if not applicable.]
- [Procedural issues: Letter 1153 delivery, Form 4183 approval, assessment statute. Delete if not applicable.]
Facts
[State the business history and the taxpayer's position in dated paragraphs: title, start and end dates, who owned the business, who hired and fired, who signed returns, who decided which creditors to pay, who controlled bank accounts and payroll, and when the taxpayer learned the trust fund taxes were unpaid. Cite the exhibits (bylaws, minutes, bank signature cards, check register, payroll service agreement, resignation letter, Form 4180 transcript).]
Issue 1: Not a responsible person
Responsibility under IRC 6672 is a matter of status, duty and authority (IRM 5.7.3.4.1). The taxpayer did not have the duty to perform, the power to direct the collection of trust fund taxes, accountability for and authority to pay them, or authority to determine which creditors would be paid. [Apply the IRM 5.7.3.4.1 indicators to the facts: the taxpayer was not an officer, director or shareholder / held the title of [title] without authority over disbursements / signed checks only as directed by [owner or supervisor] and could not choose which bills to pay / did not sign or file Forms 941 / did not control payroll or make deposits.] Check-signing authority alone does not establish responsibility; IRM 5.7.3.4.1.1 recognizes that “Signatory authority may be merely a convenience.” [For a non-owner employee: Under Policy Statement 5-14 and IRM 5.7.3.4.1.2, a non-owner employee who performs ministerial acts under the dominion and control of others and cannot make independent decisions for the business is not assessed the TFRP. The taxpayer owned no stock or other interest in the business and acted solely at the direction of [name or title]. The taxpayer did not have significant control over the company's finances: the taxpayer could not decide which creditors to pay, could not obtain financing, and [facts]. Exhibits [numbers].]
Issue 2: Not willful
Willfulness requires that a responsible person was aware, or should have been aware, of the outstanding taxes and either intentionally disregarded the law or was plainly indifferent to its requirements (IRM 5.7.3.4.2). [State the facts on knowledge and timing: the taxpayer first learned that the [periods] deposits were unpaid on [date], from [source]; before that date [who] concealed the delinquency by [facts]; after that date the taxpayer [steps taken: directed payment of $[amount] on [date], designated to trust fund taxes; stopped paying other creditors; engaged [payroll provider]; resigned on [date]]. Exhibits [numbers].]
[Encumbered funds, if applicable: During [periods] the business had no unencumbered funds available to pay the trust fund taxes. Under the [loan and security agreement dated [date]] with [lender], all receipts were deposited to a lockbox controlled by the lender, which advanced only the amounts it approved for [net payroll and specified vendors] and refused the taxpayer's requests on [dates] to fund tax deposits (Exhibits [numbers]). The taxpayer did not prefer other creditors over the United States with funds under the taxpayer's control.]
Issue 3: Periods before the taxpayer assumed control (Slodov)
[The taxpayer became [owner / officer / manager] on [date]. The periods [list] accrued before that date. In Slodov v. United States, 436 U.S. 238 (1978), the Supreme Court held that IRC 7501 does not impress a trust on after-acquired funds and that a person who assumes control when there are no funds with which to satisfy the prior trust fund liability does not act willfully by using later receipts for other purposes. On [date] the business had [cash balance of $[amount] / overdrawn accounts] (bank statements, Exhibit [number]); no funds impressed with a trust under IRC 7501 existed, and the receipts generated after that date are not traceable to the taxes previously withheld. The taxpayer is not liable for the pre-[date] periods.]
Issue 4: Computation
[The proposed amount for [period] is $[amount]. The trust fund portion of that period is the employees' share of FICA and withheld income tax only (IRM 5.7.4.3); the proposed figure appears to include [the employer's share of FICA / penalties and interest / amounts from a return the business did not file]. In addition, the payments listed in Exhibit [number], totaling $[amount], were designated in writing to the trust fund portion of [periods] and are not reflected on the Form 4183 computation pages delivered with Letter 1153. The taxpayer requests a corrected computation.]
Issue 5: Procedure
[Letter 1153 was not hand delivered or sent by certified mail to the taxpayer's last known address as IRM 5.7.4.7 requires: [facts]. / The copy of Form 4183 delivered with Letter 1153 does not show group manager approval before the letter issued (IRM 5.7.4.7). / The assessment period for [periods] under IRC 6501 expired on [date], before Letter 1153 was mailed or delivered (IRM 5.7.3.6). Delete whatever does not apply.]
Law
IRC 6672(a); IRC 6672(b) (preliminary notice); IRC 7501; Slodov v. United States, 436 U.S. 238 (1978); IRM 5.7.3.4.1, 5.7.3.4.1.1, 5.7.3.4.1.2 and 5.7.3.4.2; IRM 5.7.4.3; [decisions of the Court of Appeals for the [number] Circuit on responsibility and willfulness, with one sentence each on the holding].
Records requested
The taxpayer requests copies of the complete Form 4183 with the group manager’s approval and the ATFR computation pages for each period, the Form 4180 interview reports of the taxpayer and of every other person interviewed, the bank signature cards and canceled checks relied on, and the revenue officer’s ICS history entries concerning the delivery of Letter 1153, so they can be reviewed before the Appeals conference. [A separate request under the Freedom of Information Act is being submitted to GLDS Support Services for the TFRP case file; delete if not.]
Declaration
Under penalties of perjury, I declare that I have examined the facts presented in this statement and any accompanying information, and, to the best of my knowledge and belief, they are true, correct, and complete.
[Signature of the responsible person] [Date]
Declaration of representative. I prepared and submitted this protest and the accompanying documents on behalf of the taxpayer under the enclosed Form 2848, which lists the trust fund recovery penalty, Form 2751 and each period above. [I know personally that the facts stated in the protest and accompanying documents are true and correct / I do not know personally whether the facts stated in the protest and accompanying documents are true and correct].
[Representative name, credential, CAF number]
[Firm, address, phone, fax, email]
Enclosures (in duplicate): Letter 1153 and Form 2751; Form 2848; Exhibits [1 through N].
When to use this protest
Letter 1153 is the preliminary notice IRC 6672(b) requires before the IRS assesses the trust fund recovery penalty against an individual. It comes with Form 2751, listing each quarter and amount, and the computation pages from Form 4183 (IRM 5.7.4.7). Under IRM 5.7.6.2 the person named can sign Form 2751, protest to Appeals, or do nothing and be assessed. This template is the protest. For the penalty, who is responsible and how the investigation runs, read the trust fund recovery penalty and Letter 1153.
The amount decides the format. IRM 5.7.6.4: “If one tax period and/or the sum of all the tax periods is more than $25,000 the responsible person must submit a Formal Written Protest.” Below that, a small case request under IRM 5.7.6.5 needs only identifying information, a request for a conference and the disputed issues. This template is a formal protest and works for either. General protest rules are on formal protest letters and the formal protest template.
Skipping the protest has a cost. Treas. Reg. 301.6330-1(e)(3) treats a received Letter 1153 offering an Appeals conference as a prior opportunity to dispute the liability, so the amount generally cannot be argued later in a CDP hearing. Mason v. Commissioner, 132 T.C. 301 (2009), is the exception: a person who never received the letter had no prior opportunity and could contest liability in the CDP hearing, though the assessment itself was valid. If the client learned of the penalty only from a collection notice, the delivery facts belong in the CDP hearing request instead.
The 60 days and how timeliness is measured
IRM 5.7.6.2 gives 60 days (75 if the letter was addressed outside the United States) from the mailing or personal delivery date. IRM 8.25.1.4: “A TBOR2 protest is considered timely if it is mailed on or before the 60th day (75th if outside of the United States), i.e., timely mailed is timely filed,” and “A timely mailed protest is still timely for purposes of IRC 6672(b)(3)(B) even if the protest is inadequate.” Use certified or registered mail; IRM 5.7.6.2 warns that “A private postage meter stamp is not evidence of when a request for appeal was mailed; it merely establishes when it was stamped.” IRC 7503 moves a weekend or holiday last day to the next business day. Fast Track Mediation and informal discussions with the revenue officer do not extend the period (IRM 8.25.1.4; IRM 5.7.6.4). A timely protest also keeps the assessment statute open: IRM 5.7.6.7 says the ASED “will not expire before 30 days after Appeals’ final administrative determination or 90 days after the date of the mailing or delivery of the Letter 1153, whichever is later.”
What each part does and why
The heading block supplies every item IRM 5.7.6.6 lists: name, address and SSN; a copy of Letter 1153 or its date; a statement that the person wants a conference; the periods from Form 2751; the disputed issues with reasons; and the law relied on. Publication 5 (Rev. 4-2021) lists the same elements.
Issue 1, responsibility. IRM 5.7.3.4.1 opens with “Responsibility is a matter of status, duty, and authority,” and lists the indicators the revenue officer used: officers, directors and shareholders; who hires and fires; who decides which creditors to pay; who signs the Forms 941; who controls payroll and disbursements; who makes deposits. Answer each one. For a non-owner, IRM 5.7.3.4.1.2 states the test, citing Brounstein: “"Significant control" means more than having the mere mechanical duty of signing checks or preparing tax returns or having a title that appears to have authority.” It also sets the limit: a non-owner officer who could decide whom to pay or obtain financing cannot escape by showing an owner told them not to pay the taxes.
Issue 2, willfulness. IRM 5.7.3.4.2: “Willful means intentional, deliberate, voluntary, reckless, knowing, as opposed to accidental. No evil intent or bad motive is required.” The decisive facts are knowledge and timing, since the IRM treats failure to investigate or correct after notice as willful. Reasonable cause is unreliable: IRM 8.25.1.3.2 records that “The Eighth and First Circuits have determined that reasonable cause is not a defense,” and that others allow it only in extremely limited circumstances. The encumbered-funds paragraph is different; it goes to whether funds under the person’s control were used to prefer other creditors. Document the lender’s control with the loan agreement and the refused requests.
Issue 3, Slodov. Slodov v. United States, 436 U.S. 238 (1978), holds that section 7501 “does not impress a trust on after-acquired funds,” because “there must be a nexus between the funds collected and the trust created.” A successor does violate the statute by failing to pay over trust-impressed funds on hand at the takeover, so the bank balance on that date is the decisive exhibit. IRM 8.25.1.3.1 points Appeals officers to Slodov.
Issue 4, computation. IRM 5.7.4.3 limits the Form 941 penalty to the employees’ share of FICA and withheld income tax, applies undesignated payments in the government’s best interest under Rev. Proc. 2002-26, and requires the calculation to be updated before Form 4183 is approved. Compare the computation pages with the transcripts and any designated payments.
Issue 5, procedure. IRM 5.7.4.7: “Do not issue Letter 1153 before GM approval of Form 4183,” and the letter must be hand delivered or sent certified mail to the last known address. Appeals does not consider collectibility (IRM 8.25.1.4); hardship belongs in a Form 433-A to the revenue officer under IRM 5.7.5. See the approval timing checker for the Form 4183 date.
Records request. IRM 5.7.6.7.1 has the revenue officer screen the protest for new information, defined as “information that was not previously discussed with or raised by the responsible person, or not previously investigated and documented by the RO.” Knowing what the Form 4180 interviews and Form 4183 narrative say is how the protest contains something new. The IRS FOIA page says a person working with an IRS employee on an open case can ask that employee for information from the file; FOIA to GLDS Support Services is the formal route (see reading the file under FOIA).
Declarations. IRM 5.7.6.6 requires the exact perjury statement in the template and, where a representative signs, a substitute declaration stating that the representative submitted the protest and whether they know personally that the facts are true. The Form 2848 must cover the responsible person, not the business; IRM 5.7.4.7 says line 3 should show the trust fund recovery penalty, Form 2751 and each period.
Where to send it and what happens next
- Send the protest in duplicate to the revenue officer at the address on Letter 1153, by certified mail or by fax where allowed (IRM 5.7.6.4). Keep the receipt.
- The RO reviews it within 10 days for completeness; a timely but incomplete protest stays timely, and Appeals accepts jurisdiction even if elements are missing (IRM 5.7.6.7).
- If the RO agrees with new information, the determination is changed (IRM 5.7.6.8); otherwise the RO prepares a rebuttal and the file goes to Appeals through Control Point Monitoring (IRM 5.7.6.9).
- Appeals treats each person and each quarter as a separate work unit (IRM 8.25.1.4.1) and may settle on hazards of litigation. If the penalty is sustained, the remaining routes are the divisible-payment refund claim and suit described on the TFRP page.
Mistakes
- Using a postage meter or ordinary mail. Only a postmark or certified or registered mail proves the mailing date.
- Protesting only responsibility. Argue willfulness and the computation in the alternative; Appeals works them separately.
- Repeating the Form 4180 answers. The IRM’s own example says that is not new information.
- Arguing hardship to Appeals. Collectibility is the revenue officer’s decision under IRM 5.7.5.
- A Form 2848 for the business only. The responsible person is a separate taxpayer.
- Signing Form 2751 while protesting. The signature becomes agreement once the period runs.
Questions practitioners ask
Can the protest be faxed?
IRM 5.7.6.4 says the written appeal must be mailed (or faxed, if applicable) within the period. Confirm the number with the revenue officer, keep the confirmation, and mail a duplicate by certified mail.
Does a protest stop the assessment?
Yes, until Appeals decides. Notice and demand cannot issue until the 60 or 75 days plus five days pass (IRM 5.7.4.7), and the assessment statute is extended under IRC 6672(b)(3).
Will Appeals consider that the client cannot pay?
No. IRM 8.25.1.4 says Appeals does not consider collectibility. Give the revenue officer a Form 433-A before assessment; IRM 5.7.5 directs nonassertion where there is no present or future collection potential.
What if the IRS increases the amount after the protest?
IRM 5.7.4.7.1 requires a new Letter 1153 and Form 2751 for the affected periods, with a new protest period for those periods only; the original deadline still governs the unchanged periods.