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
Letter 5699 and CP259 are non-filer notices for businesses. If your business was required to file a return (partnership, S-Corp, corporation, or employment tax) and did not, these letters ask you to file or explain why no return is due. Penalties for late-filed business returns are substantial: $250 per partner per month for partnership returns, and similar penalties for S-Corp returns.
Information Return Penalties
CP162 is the penalty notice for late-filed partnership or S-Corp returns. CP283 is for exempt organization returns. 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.