What This Letter Means
Letter 313C is a Federal Tax Deposit (FTD) Penalty Proposal sent to a business. When you file an employment or excise tax return, you must also show when your tax liability arose during the period. That schedule is called a record of federal tax liability. Depending on the return it is Schedule B for Form 941, Form 945-A for Forms 944, 945, and CT-1, Form 943-A for Form 943, or Schedule A for Form 720.
Your schedule was missing, incomplete, or didn't match the return. Without it, the IRS can't tell whether your deposits were on time. So it spread your total tax evenly across the period and figured a penalty based on that average. That averaged penalty is what the letter proposes.
What to Do
- Complete the blank schedule enclosed with the letter. Show your actual liability by pay date or period, and make sure the total matches the tax on your return.
- Return it by the date on the letter, with a copy of the letter.
- Use your payroll records to fill it in. Your payroll provider can usually produce the liability detail.
When the IRS receives an acceptable schedule, it recomputes the penalty based on your actual deposit dates and sends you a notice with the corrected amount. If your deposits were timely and sufficient, the penalty can drop a lot or disappear.
If You Don't Respond
The IRS assesses the averaged penalty. If your schedule shows up after the assessment, the IRS still considers it and adjusts the penalty, but by then you are dealing with a balance due notice.
If Your Schedule Is Rejected
If the schedule you send is not acceptable, the IRS will contact you or return it with an explanation. You then have 20 days to send acceptable information or the proposed penalty will be assessed.
Other Problems
If a deposit you made is missing from the account, send proof of payment. A deposit applied to the wrong period is a separate fix the IRS can make once it finds the payment.
If your business received Letter 313C and payroll deposits are a recurring problem, call us at (813) 229-7100.