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Appealing the Proposed Assessment Trust Fund Penalty Assessment
Letter 1153 advises the responsible party of his or her appeal rights.
The form that the appeal must take is based on the dollar amount of the proposed assessment.
The Letter 1153 also advises the responsible party that they may contact the IRS Revenue Officer within ten days of the Letter 1153 if:
They don’t agree with the proposed trust fund recovery assessment and have additional information to support their case
If you wish to try to resolve the matter informally:
In order to preserve their appeal rights, the responsible party must mail (or fax, if applicable) a written appeal within 60 days of the mailing or personal delivery of the letter (75 days if the letter is addressed to the responsible party outside of the United States). If the revenue officer does not agree with the information submitted informally, then the revenue officer should advise the taxpayer that they must follow the appeal procedures included in the Letter 1153(DO).
TFRP cases are also eligible for Fast Track Mediation (FTM). This program is designed to expedite case resolution since the entire process normally takes 30-40 days to complete. Additional information can be found in Publication 3605, Fast Track Mediation – A Process for Prompt Resolution of Tax Issues. Publication 3605 should be provided to the taxpayer to explain the FTM process.
The ASED is only extended for cases where the taxpayer files a proper appeal within the allowable time period; FTM has no impact on the ASED or the regular appeals procedures. Advise the taxpayer that even if they choose FTM, they must continue to follow the procedures in Letter 1153(DO) by filing the appropriate request within 60 days of issuance of the Letter 1153(DO) if they wish to have the case considered by the Appeals office in case the FTM is not resolved in their favor.
Both the taxpayer and the revenue officer must agree to mediate. The taxpayer must have completed a Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Tax, and supplied all requested back-up documentation related to the trust fund recovery penalty investigation. To initiate the FTM process, the revenue officer will complete an “Agreement to Mediate” and a ” Summary of Issues” and forward the documents to Appeals within three days of securing the taxpayer’s signature.
If the parties do not reach an agreement, then the case will be forwarded to Appeals through Advisory if the taxpayer followed the instructions in Letter 1153(DO) regarding the formal appeal process. The case will then be assigned to a different Appeals officer. If the taxpayer did not follow the formal appeals process, the case should be forwarded for assessment. The taxpayer may still file a claim for refund after assessment if appropriate payment has been made.
If the revenue officer agrees with the information that was submitted informally or if the parties reach an agreement through the mediation process, then the revenue officer should change the determination by following the procedures in IRM 5.7.6.1.7.
If the revenue officer does not change the determination based on the information submitted informally, he or she should advise the taxpayer to follow the formal protest procedures outlined in Letter 1153(DO) in order to protect their appeal rights.
If the amount of tax liability proposed for the the period is:
Dollar Amount Type of Appeal
$25,000 or Less Small Case Request
More than $25,000 Formal Written Protest
If one tax period is more than $25,000 the taxpayer must submit a formal Written Protest.
IRM 5.7.6.1.4 contains the guidelines on the information that the taxpayer should include in a Small Case Request. IRM 5.7.6.1.5 contains the information that the taxpayer should include in a Formal Written Protest. The responsible party should submit any additional information or documentation that he or she wants the Settlement Officer/Appeals Officer to consider.
Note:
Usually appeals of penalty cases involve issues of responsibility and/or willfulness or how the penalty was calculated.
