Thursday, August 11, 2016

‘Holiday Error’ Causes Some Payroll Tax Deposits to Be Late

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PNN: IRS Holiday Error

The IRS has alerted employers that many payroll tax deposits made on May 31 (next day- depositors) and June 2 (semiweekly depositors) were incorrectly sent late notices even though the deposits were timely. The error was caused by a programming error that did not account for the Memorial Day holiday. The observance of the holiday moved the May 30 (next-day) deadline to May 31 and the June 1 (semiweekly) deadline to June 2.

Failure-to-Deposit Penalty Corrected
Employers that receive a notice (CP161) of a failure-to-deposit penalty will receive a new notice of adjustment (CP210/220) stating that the account was corrected and that they do not owe the penalty.

Notice of Incorrect Deposit, Penalty Waived
Employers that receive a CP276B notice stating that their deposit was made incorrectly but that the IRS waived the penalty. They will not receive another notice.

The IRS advises that its systems have been corrected and impacted taxpayer accounts will be updated. Affected employers are not required to respond to the notices. Check back with Pay News Now as we continue to monitor this situation.