Payroll Tax Case-Next Steps

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    teri adams

    I am a new member and so very happy to be here. Huntsville, AL is growing and starved for Tax Reps. I am so excited about adding this to my business.

    I need some help in what I need to do to about penalties/interest in a payroll tax case for a 2 year old C- Corp. My client had never paid payroll taxes and began payroll in December 2017. I was able to assist him in getting in compliance with the State of Alabama but he had never received any IRS notices so he thought he was okay. I told him no, he wasn’t, and prepared and mailed the 941 for all of the required past quarters to at least get him in compliance with those filings and then we could work out a payment plan. He began receiving the notices from the IRS about two months after we mailed them in. During that two months, the business paid each month owed online for each month owed which totaled $58,000. Plus, he was able to remain in compliance with the amounts currently due. His actual tax liability is paid.

    Now, it is time to address the penalties and interest amounts due to make arrangements. The amounts which went unpaid was $58,000. TFRP $30,000++? What do I do now? The client does not have all the notices received. I am unsure of the penalty amount. Do I call the IRS(or can I get the information online) and get penalty amount breakdowns so I can see what may qualify for First time Penalty Abatement? and set up installment arrangement for the trust fund penalty? I am not sure and would appreciate any help!!!

    I have went back, of course, and watched our TRN training videos and also the TRN podcast and may not have listened to the right one to get the answer. Though, I really feel like Eric Green is my new best friend, with the time I have spent listening and going through the training! It is amazing. I can tell you what I heard two weeks ago on one of his PODCASTS without thinking about it and would have to stop and think if you asked me what I had for lunch yesterday? I know right? Any help you can offer will be of so much value to me. I am not confident about my next move with this and need to be.

    Teri Adams


    Teri have you pulled his transcripts?

    Eric Green

    Teri, absolutely pull the transcripts. If all taxes were paid then the company and the responsible owner are cleared. Given they never got around to assessing the owner that was probably a non-issue.

    What should be left is the penalties and interest on the company. You can always call and ask for first time abatement for the first quarter. Does he have reasonable cause for the other quarters?

    teri adams

    I will do the transcripts on the individuals.

    All that is left is penalties & interest and he doesn’t have reasonable cause for other quarters. Until October 2018 he thought that QBO was transmitting his taxes electronically. QBO would pop a box up when the federal and state taxes were due and ask if he wanted to pay his taxes so he clicked yes. He did not know that he had to take additional steps in the software to epay thru QBO.

    The client was not reconciling his bank account regularly so he had no clue that the payments were not coming out. I thought he had paid all his payroll taxes at first glance because nothing looked past due in Quickbooks online. It wasn’t until I went deeper that I discovered and identified the issues.


    Blame QBO. It sort of worked for a former Secretary of Treasury with TurboTax in that the Senate confirmed his nomination. I don’t recall hearing what he and IRS concluded regarding penalties and interest.

    Given that he appears to be currently compliant I would think trying to negotiate the penalties could well be productive. I doubt IRS will be so agreeable on the interest but you can certainly ask them.

    And there is always an installment agreement.

    Raymond Garnsey

    Hi Teri

    I moved back to CT from Madison (near the airport) in 2016.

    I did pick up a few clients when I was there.

    How are you getting your clients?

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