CP15B Notice: The IRS Charged You a Trust Fund Recovery Penalty

What CP15B means

Trust fund taxes are the income tax and the worker’s share of Social Security and Medicare taxes a business withholds from wages, plus excise taxes it collects. The IRS TFRP page says the penalty equals the unpaid trust fund tax, and that once the IRS charges it, the IRS can file a federal tax lien or take a levy against your personal assets. A lien is a public claim on your property; a levy is a legal seizure of it.

Before it charges the penalty, the IRS must deliver Letter 1153, the letter that proposes the penalty and explains your appeal rights (IRM 5.7.4.7). CP15B comes after that step.

How to pay or set up a payment plan

The notice shows your amount due, due date and payment options.

If you can’t pay in full, the IRS page says you can apply online for a payment plan, such as an installment agreement, a deal to pay the IRS in monthly amounts. If you can’t apply online, call the number on your notice. To see which kind of plan might fit your balance, try the payment plan estimator.

How to contest the penalty

The IRS page sets out two steps. First, pay a small part of the penalty: for employment taxes, the withheld tax for one employee for each quarter of the penalty; for excise taxes, the part tied to one transaction for each quarter.

Second, file a claim for refund of that payment for each quarter at issue on Form 843, Claim for Refund and Request for Abatement. The IRS reviews the claim, and it can accept or deny it.

The law calls that payment “the minimum amount required to commence a proceeding in court” (IRC 6672(c)(1)(A)). If the IRS denies your claim, a court can decide whether you owe the penalty.

The 30-day window to stop collection

A refund claim alone does not stop collection. The IRS page says you must also make the payment and “post a bond with us for one and a half times the balance owed (the penalty amount minus any payments made)” (IRC 6672(c)(3)). A bond is a written guarantee of payment from a backer the IRS accepts.

You must make the payment, file the claim and furnish the bond within 30 days after the IRS makes notice and demand for the penalty (IRC 6672(c)(1)). Notice and demand is the IRS’s formal bill for an amount it has charged. No IRS source we read names CP15B as that notice and demand, so your 30 days may have started before CP15B came. Ask a tax professional now which date applies.

Take all three steps in time, and the law bars a levy or a court suit to collect the rest until your case ends (IRC 6672(c)(1)).

If the IRS denies your claim, you must file suit in a federal district court or the Court of Federal Claims within 30 days after the denial, or the protection ends (IRC 6672(c)(2)). The IRS can still collect at once if it finds collection at risk (IRC 6672(c)(5)), and its time limit to collect pauses while the protection lasts (IRC 6672(c)(4)).

What people mistake CP15B for

Some people read CP15B as a bill for the business. It is not: the IRS charged the penalty to you, and can collect from your personal assets.

Others treat CP15B as the proposal they can still protest. That proposal was Letter 1153; CP15B says the IRS already charged the penalty.

For practitioners: what to check first

Start with the date. IRM 5.7.7.5.2 says the payment, Form 843 and the bond must come “within 30 days after notice and demand for payment.” IRM 5.7.7.5.2 does not name CP15B; IRM 5.7.4.7 names Form 3552, Prompt Assessment Billing Assembly, as notice and demand. Confirm the dates on the transcript before you count.

Next, check the Letter 1153 record. IRM 5.7.4.7 says proof of its delivery may show the responsible person “is not entitled to another opportunity to contest the correctness or amount of the TFRP” in a Collection Due Process hearing. If so, the refund claim may be the only road left.

Last, watch for Letter 3783: IRM 5.7.7.5.5 uses it to deny a claim after the 6672(c) steps, and it states the 30-day suit period.

Common Questions