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IRS goofs on employers’ filing status

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in Office Management,Payroll Management

If you receive a Letter 3007C from the IRS informing you that your filing status was changed from annual to quarterly, and you’re already a quarterly filer, don’t fret. The IRS sent these correction letters because its computers mistakenly sent letters to 25,000 employers informing them that they were annual filers, instead of quarterly filers, for 2015.

Worse: These employers’ tax deposits weren’t posted properly. The IRS is now in the process of sorting things out.

Annual versus quarterly filing mix-up. Employers that don’t withhold more than $1,000 a year may choose to file annual Form 944 instead of quarterly Form 941. The tax deposit rules for annual and quarterly filers differ significantly.  

According to the IRS, because of differences in the tax deposit rules for quarterly and annual filers, tax deposits didn’t post to these employers’ tax accounts in its business master file. To square everything up, the IRS is moving those tax deposits to the proper modules in its business master file. But, the IRS warns, failure-to-deposit penalties and interest may still be assessed. If you’re one of the affected employers, the IRS says it will work with you to abate any penalties and interest. Contact the IRS employee whose name is listed on the letter.

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