Certain you paid your second quarter employment taxes but received a failure-to-deposit penalty notice anyway? Here’s some relief.
IRS mistakenly issued penalty notices after there was a problem with how the first quarter HIRE credit (Form 941, line 12e) was applied when the agency computed the failure-to-deposit penalty.
As a result, the agency issued erroneous CP276B and CP207 notices, and some penalty assessment notices may have an incorrect penalty calculation.
Fortunately, the error applies only to the second-quarter Form 941 and has since been corrected, wrote IRS’ Shelley Dockstader in an e-mail to payroll industry members.
As you recall, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act last March 18.
That law offers incentives to employers hiring certain unemployed workers who meet specific criteria. In return, the business may receive:
- a payroll tax exemption of the employer’s share of Social Security taxes on all 2010 wages paid to these workers after 3/18/10, plus
- a tax credit up to $1,000 per worker who remains on the payroll for 52 consecutive weeks. To qualify for the retention credit, wages paid during the second 26-week period must be at least 80% of the wages paid during the first 26 weeks.