Employment Tax Notices

If your business has employees, employment taxes are your most dangerous IRS exposure. The IRS takes unpaid payroll taxes more seriously than almost any other type of tax debt. The penalties are harsher, the collection is more aggressive, and the IRS can hold you personally liable through the trust fund recovery penalty.

CP210, CP215, and CP220 are common business account notices that address adjustments, penalties, and changes to your employment tax account. Letter 3586 and Letter 1153 deal with the trust fund recovery penalty and can result in personal liability.

Non-Filer Notices

CP259 is a business-return non-filer notice. Letter 5699 is narrower: it concerns missing Affordable Care Act Forms 1094-C and 1095-C from a possible applicable large employer. Read the identifier and form references carefully because the response depends on which filing the IRS says is missing.

Information Return Penalties

CP162 is the penalty notice for late-filed partnership or S-Corp returns. CP283 is for a late or incomplete Form 5500-EZ retirement plan return. These penalties are assessed automatically and can accumulate quickly. A partnership with 10 partners that files its return 6 months late can face $15,000 in penalties. First Time Abatement and reasonable cause are both available defenses.

B-Notices for Backup Withholding

CP2100 and CP2100A are B-notices requiring you to begin backup withholding on payments to vendors who provided incorrect or missing taxpayer identification numbers. Ignoring these notices can result in penalties and make your business liable for the taxes you should have withheld.

ACA Employer Mandate

CP256V addresses the Affordable Care Act employer shared responsibility payment. If your business has 50 or more full-time equivalent employees and did not offer qualifying health coverage, this notice proposes a penalty. These penalties can be massive for larger employers.

Business owners face a wider and more complex array of IRS letters than individual taxpayers. The penalties are higher, the deadlines are tighter, and the personal liability exposure is real. Know these letters and respond to them promptly.