Purpose: This IRM section provides instructions for Collection employees for the processing of Trust Fund Recovery Penalty (TFRP) cases, including protests and quick and prompt assessment actions.

Audience: The primary users of this IRM are Field Collection revenue officers (RO) and their group managers (GM).

Policy Owner: Director, Collection Policy, SB/SE.

Program Owner: Collection Policy, SB/SE, Employment Tax (ET) is the program owner of this IRM.

Primary Stakeholders:

Program Goals: The Trust Fund Recovery Penalty (TFRP) is based on IRC 6672. It serves three purposes:

Contact Information: Email recommendations and suggested changes for this IRM to the Content Product Owner. The owner is listed on the Product Catalog Information page which is found in the Forms/Pubs/Products IRM listing of the Media and Publications web site.http://publish.no.irs.gov/catlg.html#tab=tab1.

After Letter 1153 and Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, have been properly delivered, see IRM 5.7.4.7, Notification of Proposed Assessment, the responsible person has 60 days (75 if the letter was addressed outside of the United States) from the date of the mailing of the notice or the date of personal delivery to respond.

The responsible person can take the following actions in response to Letter 1153:

The ATFR application will not allow ROs to proceed until one of the following actions occurs:

In all cases, regardless of the responsible person’s action, the RO will complete TFRP processing and forward the case to Control Point Monitoring (CPM), Civil Enforcement Advice and Support Operations (CEASO) not later than 30 calendar days after the required response period allowed in Letter 1153, (60 days after the date Letter 1153 was mailed or personally delivered, 75 days if the letter was addressed outside of the United States). In the event an employee is unable to meet the 30-day time period, they shall document the reason for the delay in the ICS history.

If the responsible person agrees to the assessment by signing Form 2751, prepare Letter 1155, Notice of Agreed Trust Fund Recovery Penalty, and deliver the letter to the responsible person no later than 14 calendar days after receipt of signed Form 2751. Prepare the letter using the ATFR application whenever possible. Document the case file with an explanation if Letter 1155 is delivered more than 14 days after receipt of signed Form 2751. Because responsible persons could change their minds after signing Form 2751 (and therefore request Appeals review before the deadline listed in Letter 1153), do not treat a case as agreed until that deadline expires, 60 days, or 75 days if the letter is addressed to the responsible person outside of the United States (plus five days). A responsible person’s signature on the Form 2751 does not extinguish their appeal rights.

Input the date Form 2751 was signed onto the ATFR application.

For regular assessments, follow procedures in IRM 5.7.6.12, Revenue Officer Assessment Actions. For cases requiring quick or prompt assessment action, follow the procedures in IRM 5.7.6.13, Quick and Prompt Assessment Actions.

Unless the responsible person has filed bankruptcy, request full payment from them when they agree to the assessment by signing Form 2751.

Follow the procedures in IRM 5.7.7.3, Pre-Assessment Payment, for processing payments received from the responsible person prior to the actual assessment of the TFRP.

If the responsible person is unable to full pay the proposed assessment, follow the instructions in IRM 5.15.1, Financial Analysis Handbook, to determine the appropriate case resolution based on an analysis of the responsible person's financial condition. This may include the following:

ROs must make a Notice of Federal Tax Lien (NFTL) filing determination in accordance with the policy and procedures in IRM 5.12.2, Notice of Lien Determinations, prior to taking the closing actions above.

To ensure the continuity of collection actions, if the TFRP account is not resolved (pre-assessed CNC or IA, full pay, etc.), the RO should request assignment of the TFRP assessment against responsible persons(s) as an ICS case and make a NFTL filing determination in accordance with the policy and procedures in IRM 5.12.2, Notice of Lien Determinations. ROs should request assignment of a TFRP assessment even if the responsible person resides outside the RO groups’ geographic area. If personal contact was established with the responsible person (even by telephone) to conduct a Form 4180 interview and to secure financial information as required by IRM 5.7.5, Collectibility Determination, the RO should continue to work with the responsible person to resolve the account. If field contact will be required to resolve the case and the responsible person’s contact address is outside their groups’ geographic area, ROs can either issue an ICS Other Investigations (OI) or transfer the case after discussing the circumstances of the case with their manager.

Letter 1153 advises the responsible person of their appeal rights. The type of appeal the responsible person must make is based on the dollar amount of the proposed assessment.

Letter 1153 also advises the responsible person they may contact the RO within ten days after delivery if:

TFRP cases are also eligible for Fast Track Mediation (FTM). This program is designed to expedite case resolution since the entire process normally takes between 30 to 40 days to complete. Additional information can be found in Pub 3605, Fast Track Mediation - A Process for Prompt Resolution of Tax Issues. Pub 3605 should be provided to the responsible person to explain the FTM process.

The ASED is only extended for cases where the responsible person files a proper appeal within the allowable time period; FTM has no impact on the ASED or the regular appeals process. Advise the responsible person even if they choose FTM, they must continue to follow the procedures in Letter 1153 by filing the appropriate request within 60 days (75 days if the letter is addressed to the responsible person outside of the United States) of issuance of the Letter 1153 if they wish to have the case considered by the Appeals office in case the FTM is not resolved in their favor.

Both the responsible person and the RO must agree to mediate. The responsible person 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 RO will complete Form 13369, Agreement to Mediate, and a brief summary of issues in memorandum form and forward the documents to Appeals within three days of securing the responsible person's signature.

If the parties do not reach an agreement, then the case will be forwarded to Appeals through CPM, if the responsible person followed the instructions in Letter 1153 regarding the formal appeal process. The case will then be assigned to a different Appeals officer. If the responsible person did not follow the formal appeal process, the case should be forwarded for assessment. The responsible person may still file a claim for refund after assessment if appropriate payment has been made; see IRM 5.7.7.5 Claim for Refund.

If at any time during either the FTM or formal appeal process the responsible person expresses their intention of withdrawing from the FTM and/or appeal process, the RO should attempt to secure a written statement from the responsible person, indicating their request. The RO should include copies of the statement in both the TFRP and corporate case files. If the responsible person changes their mind, then they may still submit a formal protest, provided they are still within the 60-day (75-day if the letter is addressed to the responsible person outside of the United States) timeframe as indicated in IRM 5.7.6.2, Responsible Person's Response to Letter 1153.

If the RO agrees with the information submitted informally or if the parties reach an agreement through the mediation process, then the RO should change the determination by following the procedures in IRM 5.7.6.8, Revenue Officer Agrees With Protest.

If the RO does not change the determination based on the information submitted informally, they should advise the responsible person to follow the formal protest procedures outlined in Letter 1153 in order to protect their appeal rights.

If the amount of tax liability proposed for the period is:

IRM 5.7.6.5, Small Case Request, contains the guidelines on the information the responsible person should include in a Small Case Request. IRM 5.7.6.6, Formal Written Protest, contains the information the responsible person should include in a Formal Written Protest. The responsible person should submit any additional information or documentation they want the Appeals officer to consider.

The responsible person should submit a Small Case Request in duplicate and should include:

The responsible person should submit a Formal Written Protest in duplicate and should include:

If an authorized representative (Form 2848, Power of Attorney and Declaration of Representative, or a properly written power of attorney or authorization is acceptable) prepares and signs the protest for the responsible person, they must substitute a declaration stating:

If the responsible person responds to Letter 1153 within the appropriate time frames, see IRM 5.7.3.7.2, Impact of Letter 1153 on Assessment Statute, and IRM 5.7.6.2, Responsible Person's Response to Letter 1153, review the request within 10 days of receipt to determine if the information is complete as discussed in IRM 5.7.6.5, Small Case Request, or IRM 5.7.6.6, Formal Written Protest.

If the information in the protest is incomplete, contact the responsible person/representative to inform them that any defects in the protest should be corrected. If the responsible person does not provide a perfected protest prior to the end of the 30-day period to complete TFRP processing and forward the case to CPM, the RO should still follow the procedures in IRM 5.7.6.9, Revenue Officer Disagrees With Protest. Appeals will accept jurisdiction of a TFRP protest even if all information as outlined in IRM 5.7.6.5, Small Case Request, or IRM 5.7.6.6, Formal Written Protest, is not included in the protest.

The responsible person is not entitled to appeal the proposed TFRP if they did not file a timely protest. Refer to instructions contained in IRM 5.7.6.2, Responsible Person's Response to Letter 1153, to determine whether the protest is timely. If the responsible person’s protest is untimely, the employee handling the proposed TFRP assessment will:

Ensure the correct Protest Postmark Date has been entered on ATFR. ATFR will measure the postmark date entered and reject it if it is untimely. ATFR will remind RO to generate and mail the Letter 1154. CPM will not review protest files to verify the timeliness of protests or the Protest Postmark Dates input by the RO.

If the information the responsible person submits changes the RO's determination on the case, the RO may concede the case in whole or in part.

To make the appropriate change on Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment, input the protest postmark date on ATFR and change the responsibility to partial or none for each period. The TFRP should then be re-calculated and the applicable forms updated. ROs must secure GM approval on an amended Form 4183.

When the decision is made to reverse all or a portion of the periods on Letter 1153, the RO will take the following actions:

If a responsible person protests the entire assessment and:

If the responsible person is only protesting part of the assessment and the RO agrees with the information submitted, the RO will make the changes on Form 4183, issue Letter 1153-W for the tax periods being conceded and attempt to secure the responsible person's signature on the updated Form 2751.

If the information the responsible person submits does not change the RO's determination on the case, or if the responsible person protests the entire assessment and the RO only concedes the case in part, the RO will:

Upon receipt of the TFRP case file, the GM will take the following actions:

After GM approval, the RO will take the following actions:

The administrative TFRP case file transmitted to Appeals is not an ex parte communication since it sets forth the boundaries of the dispute between the responsible person and the Internal Revenue Service and forms the basis for Appeals to assume jurisdiction. The TFRP case file should include all information supporting the original recommendation, as well as any work papers reflecting the manner in which payments have been applied, specifically any payments directed by the responsible person, court order, etc.

Upon receipt of the TFRP package, CPM will forward it to Appeals. See IRM 5.7.6.10, Transmittal of Case to Appeals.

Letter 1153-W cannot be issued after a protest has been forwarded to Appeals.

There may be rare instances, after a protest has been sent to Appeals, when Collection will secure significant new information that needs to be provided to Appeals to allow Appeals to fully evaluate the protest. In these rare instances, supplemental information can be provided to Appeals as long as Collection concurrently provides the same information (copy of the written communication sent to Appeals) to the responsible person/representative. Appeals will give the responsible person/representative the chance to respond to the supplemental information.

When supplemental information is provided to Appeals, the GM will prepare a letter to the responsible person/representative that identifies the new information and explains the information is being provided to Appeals. Include a copy of the written communication to Appeals and any other documents being sent to Appeals. Document issuance of the letter in the ICS history and include a copy of the letter with the supplemental information sent to Appeals.

It is Field Collection’s responsibility to ensure all necessary documents, including the ATFR and ICS case histories are contained in the TFRP case file and the protest was received timely; CPM will not review TFRP protest files for timeliness or completeness. TFRP protest case files must be assembled with Document 9708, Trust Fund Recovery Penalty Case File Tabs (Appeals Cases). This will ensure CPM can easily identify all protest cases. Each protesting responsible person file must contain all required documentation to support assessment. If a responsible person’s file was a “Supplemental” case file, ensure all pertinent documents from the “Key” case file are copied to the protest file. See IRM Exhibit 5.7.6-1, TFRP Case File Check Sheet, to assist in case accuracy and completeness.

GMs must complete and sign the TFRP Case File Check Sheet.

Submit related cases (two or more responsible persons for the same corporation) together whenever possible.

Each territory should establish a system for reviewing decisions made by Appeals to determine whether quality issues exist that need to be addressed. The territory should arrange periodic meetings with Appeals to discuss trends, workloads and other issues of interest. CPM may also establish a process to follow-up on overage Appeals cases.

Appeals may request additional information after receipt of a TFRP protest. An Appeals hearing officer may determine new information submitted by a responsible person requires investigative analysis. In this situation, Appeals will retain jurisdiction of the case and forward the new information request via Form 10467, Appeals Division Feedback Report and Transmittal Memorandum, to the originating CPM group for processing. The CPM should consult with an advisor and if it is determined additional investigative analysis by a RO is necessary, CPM will follow guidance in IRM 5.1.8.5.1, Types of Mandatory OIs, to issue an OI to Field Collection. The information should be provided within 45 calendar days of the request, this date may be extended by mutual agreement. These situations should be highly uncommon. To avoid ex parte communications, Appeals has the responsibility for informing the responsible person that the information was sent to Field Collection for investigation, sharing Field Collection’s response with the responsible person and allowing the responsible person time to comment.

Once a final determination has been made, Appeals will:

If Appeals does not sustain the original proposed assessment, a new Form 2749 must be printed to reflect the correct TFRP amount based on the decision by Appeals.

CPM will be responsible for completing any necessary quick assessment action (IRM 5.7.6.13, Quick and Prompt Assessment Actions) and ensuring the ASED is protected on these Appeals cases.

The RO will generate and print Form 2749 for each responsible person. The RO will check IDRS to make sure all periods are included on the form.

On Form 2749, the RO will:

The RO will prepare Form 3210-A, enter the "2749 to CPM" date onto ATFR, and forward the case file to CPM .

If levy information was secured for a responsible person, prepare Form 4844, Request for Terminal Action, so the levy information can be loaded to the IDRS levy file. The name, address, and TIN of the responsible person will be included on the Form 4844, and the Remarks section will contain:

It is FC’s responsibility to ensure all necessary documents, including ATFR and ICS case histories, are contained in the TFRP case file. CPM will not review TFRP files for completeness. See IRM Exhibit 5.7.6-1, TFRP Case File Check Sheet, to assist in case accuracy and completeness and Exhibit 1.4.50-2, Criteria for Review of Completed Work -Trust Fund Recovery Penalty.

Quick assessment procedures are required when the assessment statute expires within 30 days. TFRP case files must be received by CPM prior to day 30 for regular processing.

Prompt assessment procedures should be used when collection appears to be at risk and the intention is to proceed with collection action immediately following the period for notice and demand.

Do not prompt assess the TFRP if:

Quick or prompt assessment for a TFRP may be made only after the responsible person takes one of the following actions:

Quick and prompt assessments may be submitted as facsimile (fax) requests. See IRM 5.7.6.13.1, Fax Requests for Quick or Prompt Assessments. Quick and prompt assessments may also be generated thru the Automated Form 2859 Portal.

The initiating office will prepare a separate Form 2859, Request for Quick or Prompt Assessment, for each period to be assessed. If one period on Form 2749 must be manually quick or prompt assessed in order to protect the statute, all periods on the Form 2749 must be quick assessed. Complete Form 2859 with all necessary information, including the initiator's name and address. Also include information as to whether the assessment is "agreed" or "unagreed." Managerial approval of Form 2859 is required. If there is more than one responsible person on the case, all must be manually assessed.

For fax assessments, the Ogden Manual Assessment Unit will prepare Form 3552, Prompt Assessment Billing Assembly, and forward it to the initiator. The initiator will immediately deliver or mail certified Parts 3 and 4 of Form 3552, along with Pub 1, to the responsible person. Notice 960 may also be included with Form 3552 to remind the responsible person of the procedures to follow in order to file a claim for refund and request abatement of the liability. Multiple Forms 3552 for the same responsible person may be mailed together. Accounting Control/Services will also forward copies of the Forms 2749 and 3552 to the TFRP unit in Campus Compliance Operations (CCO) for input of the appropriate cross-referencing information and UNLCER information.

TFRP assessments made by the RO must contain the following in the TFRP case file:

Send the TFRP case file to CPM where it will be maintained until retired to the Federal Records Center.

A completed TFRP case file will consist of the following documents:

Copies of the following documents, if secured or prepared as part of the TFRP investigation, must also be included in the TFRP case file:

Other information that must be included in the TFRP case file, if it was secured or prepared, includes:

Create and maintain a separate TFRP file for each person against whom the TFRP is assessed. If multiple related assessments are made with regard to a single employer, the supporting documentation should be maintained in the key file (Document 9600C) and cross-referenced in the supplemental files (Document 9526). Keep all related TFRP files together whenever possible (see IRM 5.7.610., Transmittal of Case to Appeals, for situations when not all parties are appealing the assessment).

Include copies of any approved Forms 4183, Forms 9327, as well as any Form 2750 waivers that were secured in the business balance due case file.

TFRP case files are maintained by CPM for two years after the assessment. After two years the files are sent to the Federal Records Center where they are destroyed 12 years after assessment;(this allows for the CSED plus 2 years for the responsible person to file a claim for refund.

Submit requests for TFRP case files to the centralized CPM site in Fresno, CA. If the case file is no longer in the centralized CPM site, CPM will follow the guidelines in IRM 1.15.4.10, Requesting Records from the FRC, for requesting records from the Federal Records Center using Form 2275, Records Request, Charge, and Recharge.