Payroll Tax Penalties, When the IRS Sends a Letter
“Payroll Taxes are Due, with Penalties and Interest”
At least that is what the letter from the IRS says. First thing, don’t panic. Quoting Daniel J. Pilla’s study for the Cato Institute “About 40 percent of the revenues the IRS collects through penalty assessments are abated when citizens challenge the penalties.”
So we now know the odds are good that the IRS is wrong or will blink first. What do we do?
The normal problems with payroll taxes are.
Failure to File.
Taxes under reported.
Taxes under deposited.
Taxes deposited late.
Any of these can create a situation where the services charges penalties and interest against a business and then sucks up subsequent tax deposits creating additional late and short payments simply exacerbating the situation. We will get to that later.
Read the notice from the IRS. It should tell you why they are charging a penalty and interest and how it is calculated. If the notice does not lay out that information, you have missed the first notice from the IRS. That is not at all unusual. If you don’t have the first notice call the IRS and get all the information from them. Also ask them to fax you a “Statement of Account” for the period and type of tax in effect. This will show you what they have on the IRS file, without regard to whether it is correct or not.
Failure to file.
The IRS says you never filed a return and they have created a return for you. They will estimate taxes due in an amount they know exceeds what would be reasonably due based on your account. They do this to get your attention. Many people, if the estimated amount were too low, would just pay it. The IRS does not want that to happen so they always over estimate if they create a “Substitute Return” and file it for you.
The answer to that is to send a copy of the return. If you filed it certified mail send a copy of the receipt when it was sent proving the date and a copy of the return receipt showing it was received. One tip is never sending more than one return in an envelope. The clerk opening the envelope may staple them together and only the top return will ever be reported as being received. If you didn’t send it certified in your accompanying letter talk about your history of filing on time and this one was surely just misrouted. If you have collateral proof of the filing date like a cancelled check that was sent with the return quote that information or even include copies.
At least that is what the letter from the IRS says. First thing, don’t panic. Quoting Daniel J. Pilla’s study for the Cato Institute “About 40 percent of the revenues the IRS collects through penalty assessments are abated when citizens challenge the penalties.”
So we now know the odds are good that the IRS is wrong or will blink first. What do we do?
The normal problems with payroll taxes are.
Failure to File.
Taxes under reported.
Taxes under deposited.
Taxes deposited late.
Any of these can create a situation where the services charges penalties and interest against a business and then sucks up subsequent tax deposits creating additional late and short payments simply exacerbating the situation. We will get to that later.
Read the notice from the IRS. It should tell you why they are charging a penalty and interest and how it is calculated. If the notice does not lay out that information, you have missed the first notice from the IRS. That is not at all unusual. If you don’t have the first notice call the IRS and get all the information from them. Also ask them to fax you a “Statement of Account” for the period and type of tax in effect. This will show you what they have on the IRS file, without regard to whether it is correct or not.
Failure to file.
The IRS says you never filed a return and they have created a return for you. They will estimate taxes due in an amount they know exceeds what would be reasonably due based on your account. They do this to get your attention. Many people, if the estimated amount were too low, would just pay it. The IRS does not want that to happen so they always over estimate if they create a “Substitute Return” and file it for you.
The answer to that is to send a copy of the return. If you filed it certified mail send a copy of the receipt when it was sent proving the date and a copy of the return receipt showing it was received. One tip is never sending more than one return in an envelope. The clerk opening the envelope may staple them together and only the top return will ever be reported as being received. If you didn’t send it certified in your accompanying letter talk about your history of filing on time and this one was surely just misrouted. If you have collateral proof of the filing date like a cancelled check that was sent with the return quote that information or even include copies.
“Payroll Taxes are Due, with Penalties and Interest”
At least that is what the letter from the IRS says. First thing, don’t panic. Quoting Daniel J. Pilla’s study for the Cato Institute “About 40 percent of the revenues the IRS collects through penalty assessments are abated when citizens challenge the penalties.”
So we now know the odds are good that the IRS is wrong or will blink first. What do we do?
The normal problems with payroll taxes are.
Failure to File.
Taxes under reported.
Taxes under deposited.
Taxes deposited late.
Any of these can create a situation where the services charges penalties and interest against a business and then sucks up subsequent tax deposits creating additional late and short payments simply exacerbating the situation. We will get to that later.
Read the notice from the IRS. It should tell you why they are charging a penalty and interest and how it is calculated. If the notice does not lay out that information, you have missed the first notice from the IRS. That is not at all unusual. If you don’t have the first notice call the IRS and get all the information from them. Also ask them to fax you a “Statement of Account” for the period and type of tax in effect. This will show you what they have on the IRS file, without regard to whether it is correct or not.
Failure to file.
The IRS says you never filed a return and they have created a return for you. They will estimate taxes due in an amount they know exceeds what would be reasonably due based on your account. They do this to get your attention. Many people, if the estimated amount were too low, would just pay it. The IRS does not want that to happen so they always over estimate if they create a “Substitute Return” and file it for you.
The answer to that is to send a copy of the return. If you filed it certified mail send a copy of the receipt when it was sent proving the date and a copy of the return receipt showing it was received. One tip is never sending more than one return in an envelope. The clerk opening the envelope may staple them together and only the top return will ever be reported as being received. If you didn’t send it certified in your accompanying letter talk about your history of filing on time and this one was surely just misrouted. If you have collateral proof of the filing date like a cancelled check that was sent with the return quote that information or even include copies.
At least that is what the letter from the IRS says. First thing, don’t panic. Quoting Daniel J. Pilla’s study for the Cato Institute “About 40 percent of the revenues the IRS collects through penalty assessments are abated when citizens challenge the penalties.”
So we now know the odds are good that the IRS is wrong or will blink first. What do we do?
The normal problems with payroll taxes are.
Failure to File.
Taxes under reported.
Taxes under deposited.
Taxes deposited late.
Any of these can create a situation where the services charges penalties and interest against a business and then sucks up subsequent tax deposits creating additional late and short payments simply exacerbating the situation. We will get to that later.
Read the notice from the IRS. It should tell you why they are charging a penalty and interest and how it is calculated. If the notice does not lay out that information, you have missed the first notice from the IRS. That is not at all unusual. If you don’t have the first notice call the IRS and get all the information from them. Also ask them to fax you a “Statement of Account” for the period and type of tax in effect. This will show you what they have on the IRS file, without regard to whether it is correct or not.
Failure to file.
The IRS says you never filed a return and they have created a return for you. They will estimate taxes due in an amount they know exceeds what would be reasonably due based on your account. They do this to get your attention. Many people, if the estimated amount were too low, would just pay it. The IRS does not want that to happen so they always over estimate if they create a “Substitute Return” and file it for you.
The answer to that is to send a copy of the return. If you filed it certified mail send a copy of the receipt when it was sent proving the date and a copy of the return receipt showing it was received. One tip is never sending more than one return in an envelope. The clerk opening the envelope may staple them together and only the top return will ever be reported as being received. If you didn’t send it certified in your accompanying letter talk about your history of filing on time and this one was surely just misrouted. If you have collateral proof of the filing date like a cancelled check that was sent with the return quote that information or even include copies.
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