Payroll Group Presses IRS On Recent Penalty Notices

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By Keith M. Hill

The Internal Revenue Service should issue taxpayer communications of processing errors and associated resolutions quicker, the National Payroll Reporting Consortium said in a letter to the agency.

In the Sept. 20 letter to the IRS, the association expressed concerns and offered suggestions related to the recent erroneous Emancipation Day and Memorial Day federal tax deposit penalty notices. “These situations caused significant challenges to the payroll service provider community which we believe present an opportunity for similar future events,” said the letter, which was sent to Debra Holland, commissioner of the IRS wage and investment division. A copy of the letter from the nonprofit trade association was obtained by Bloomberg BNA.

IRS communications with employers should be proactive and posted on the agency's website, said the letter.

“Perhaps the most significant concern resulting from these recent issues was the delay in formal communication from the IRS,” the letter said. Updates that the NPRC received from its national accounts manager regarding the status and scope of the penalty notice issue were informal communications that could not be disclosed to clients, the letter said.

Meeting Obligations

“The vague and incomplete information received throughout the duration of these two recent issues created significant challenges” for NPRC member organizations in meeting service obligations to its clients, the letter said.

For example, there were timing discrepancies between implementing IRS systemic fixes to correct taxpayer accounts and the sending of notices to employers. Any further notices sent to employers could have been suppressed once the issue was identified and CP161 notices were sent out, the letter said.

The IRS penalty department reviewed the issue for the remaining holidays this year and believes the problem was resolved, said Scott Mezistrano of the agency's industry engagement and strategy group.

To contact the reporter on this story: Keith M. Hill in Washington at To contact the editor responsible for this story: Michael Trimarchi at

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