What This Letter Means

Letter 99C, Notice of Employment Tax Problem, goes to employers. It comes from the IRS Combined Annual Wage Reporting (CAWR) program. CAWR compares what you reported on your federal employment tax returns against the information returns filed for the same year.

The employment tax returns are Form 941, 944, 943, 945, or Schedule H. The information returns are the W-2s sent to the Social Security Administration and the W-2G or 1099-R forms sent to the IRS. The IRS matches four amounts: Social Security wages, Social Security tips, Medicare wages and tips, and federal income tax withheld.

When the numbers don't match, the IRS sends this letter. It is not a bill. It is a proposed increase or decrease in tax based on the comparison.

What to Do

  • Compare the totals in the letter to your payroll records, your employment tax returns, and your W-2s.
  • Find the cause. Common ones: a Form 941 that wasn't filed or processed, W-2s that were missing or not processed by the Social Security Administration, or an error in figuring the tax on the return.
  • If forms are missing, identify them and send copies.
  • If your W-2s are right and nothing is missing, the employment tax return was likely wrong. File the correct adjusted return, such as Form 941-X.
  • Send a complete response to the CAWR unit at the address or fax number on the letter. Keep a copy.

If You Don't Respond

When the response period ends with no reply, the IRS assesses the additional tax it proposed. The same thing happens if the letter comes back undeliverable and the IRS can't find a better address.

Deadlines

Respond by the date printed in your letter.

If your business received Letter 99C and your payroll numbers don't reconcile, call us at (813) 229-7100.