The IRS is currently taking some heat for issuing incorrect penalty notices to thousands of employers and their payroll processors. The notices were sent after the IRS did not accurately take into account two federal tax holidays and the resulting change in payroll tax deposit requirements.
Federal holidays that occur during the work week change the date as to when payroll tax liabilities need to be deposited. For example, if a business generates a next day tax liability on a Friday, normally that tax deposit would be due the following Monday. However if that Monday is a federal holiday, it would not be due until Tuesday.
According the IRS officials, the IRS experienced a programming error that resulted in IRS systems not recognizing changes in payroll tax deposit due dates for two holidays. Not only did notices go out for late payments for Emancipation Day, Monday, April 18, they also went out for for Memorial Day, Monday, May 30. As a result, thousands of businesses received penalty notices for late deposits when in fact businesses that made the deposits on those Tuesdays were not late and thus not subject to penalty.
The IRS has issued notices to all affected business indicating that the penalty is in fact not due. According the IRS officials, those employers that received a notice that a penalty was waived by the IRS will not receive any further notices regarding these incidents.
Representatives of the payroll service industry notified the IRS of their concern regarding this error. They wanted assurances that system glitches were repaired so that the error would not occur again for future holidays, and they wanted the misperceptions of their clients addressed. IRS officials explained that they were confident that they had taken steps to ensure the error would not occur again this year, and that employers had been notified of the changes regarding the penalties due.
If you think you have received an IRS late tax deposit penalty notice in error, please contact us if you need assistance.
About Time & Pay:
Time & Pay is a professional payroll service provider located in Johnson City, TN. We service businesses of all sizes and types throughout the United States. Founded in 1992, Time & Pay provides businesses with complete payroll services , guaranteed payroll tax compliance, automated time and attendance systems and services, pay-as-you-go worker’s comp, human resource management systems and services, ACA compliance and more. We provide our customers with the cost effective tools you need to better manage your payroll, your employees and your business. Time & Pay’s services guarantee you will save money, time and aggravation and we back them up with the customer service you expect and deserve. Contact Us today to learn why business owners throughout the country are saying:
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