United States

IRS issued erroneous failure-to-deposit notices

No action required from businesses in receipt of the notices

TAX ALERT  | 

On Aug. 4, 2016, the IRS announced that due to a computer programming error, the IRS failed to take into account changes to the due date for making employment tax deposits. The error was due to the Memorial Day holiday that was observed on Monday, May 30, 2016.  As a result of this error, many employers who made next-day employment tax deposits on May 31, 2016, or made semi-weekly employment tax deposits on Thursday, June 2, 2016, received notices indicating that either there was an unpaid balance due or that a deposit was not correctly submitted.

An IRS spokesperson stated that the mistake has been corrected and no action needs to be taken by the taxpayers who received the incorrect notices. Those employers who received the incorrect Notice CP-161 that included a failure-to-deposit penalty as a result of this programming error will receive an adjustment notice indicating that the taxpayer’s account was corrected and that no penalty is due. Employers who received a Notice CP-267B for an incorrect deposit that did not include the penalty will not receive any further correspondence from the IRS and do not need to take any actions.

If your business received either a Notice CP-161 or a Notice CP-267 relating to a deposit of  employment taxes made on May 31, 2016, (relating to a next-day deposit), or on June 2, 2016, (relating to a semi-weekly deposit), please be aware of the IRS’s computer programming error and disregard such notices.

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