What This Notice Means

Your deposit schedule, the Record of Federal Tax Liability (ROFTL), has missing or incorrect information. The IRS needs a corrected one.

The IRS rejects a ROFTL that has incorrect, missing, illegible, or negative entries, or where the total liability doesn't equal the total tax on the return.

What to Do

Complete a new ROFTL and mail it to the address at the top of your notice within 45 days of the notice date. To get it accepted:

  • Report each tax liability.
  • On a monthly schedule, list the total liability for each month.
  • On a semiweekly schedule, list the liability for each pay date.
  • Report liabilities only. Don't list your deposits.
  • Don't show negative amounts. Apply a decrease to the matching liability without going below zero, and carry any remaining decrease to later liabilities.
  • Make sure the ROFTL total matches the total tax liability on your return.

Why This Matters

If you don't reply, the IRS averages your total liability across the tax period and applies your deposits to those averages in the order received. That often makes deposits look late when they weren't. Penalties for amounts not properly or timely deposited are:

  • 1 to 5 days late: 2%
  • 6 to 15 days late: 5%
  • 16 or more days late: 10%
  • Required to use EFTPS but didn't: 10%
  • Not paid within 10 days of the first notice: 15%

If your reply is late, the IRS assesses the penalty first, then reviews your response and adjusts.

If a Deposit Was Late

The IRS won't consider removing a deposit penalty until it has a correct ROFTL. If you had reasonable cause for a late deposit, include a statement signed under penalty of perjury with your reply.

Next Time

Attach a complete ROFTL to the return and check that its total equals the total tax. Semiweekly depositors must list the liability for each payday. The Schedule B (Form 941) instructions explain how.

If a CP207 is turning into a deposit penalty and your payroll records are a mess, call us at (813) 229-7100.