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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Sometime in 2010 I received notice from the IRS that they

Customer Question

sometime in 2010 I received notice from the IRS that they had not received payment of my emloyee payroll taxes. At the time, my payroll ws being handled by Paycheks payroll company. When I coontacted them they found out in fact they hadnt paid them and said they would take care of it. I just received a penalty fro the IRS for nearly $20,000 for the failure to pay the taxes in a timely manner. Should this not be incurred by Paycheks? Thanks for your advice. Frank
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Hi Frank and welcome to our site!
From the IRS prospective - that is your failure to pay taxes - and because of that - penalties are assessed on you.
That was your choice to hire a service provider - but that fact woudl not relief your responsibility.

I would suggest to contact Paycheks and request a compensation for damages. Their responsibility is based on signed contract - so you might want to review the contract regarding such situation.
If they woudl not agree - you my sue them for damages.
Another option (and generally that woudl not eliminate their responsibility) - is to communicate with the IRS asking to abate penalties.

Expert:  Lev replied 1 year ago.

here is a form to request penalty abatement.

You may either use a form or may attach a note (better type instead of hand written).

File a form 843 -http://www.irs.gov/pub/irs-pdf/f843.pdf.

When form 843 is filed to request an abatement of penalties - you would need to provide a reasonable cause.

to request the accuracy related penalty to be abate based on reasonable cause. If you provide the reason like I forgot - I do not think it will be considered as reasonable - so be careful when prepare an abatement request.

The best would be to use a local CPA who will evaluate your situation and help with preparation of the abatement request.

Here are some common examples that the IRS provides for considering individuals for penalty abatement.

-- Death of the family member

-- Unexpected absence (in prison, hospital, etc)

-- Casualty event (fire, flood, etc)

-- Unforeseen circumstances (divorce, etc)

-- Incorrect advice from a tax professional

-- Incorrect advice from the IRS

-- An accuracy related error when acting with ordinary business care and prudence

-- Other (reasons are not limited by the above list)

Specific regulations and wording regarding Reasonable Cause - see IRM (Internal Revenue Manual) 20.1.1.3.2 (11-25-2011)

http://www.irs.gov/irm/part20/irm_20-001-001r.html

I hope that helps.

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