A recent business client of Chicago Tax Attorney Patrick T. Sheehan & Associates had not filed its Forms W-2 or W-3 with the Social Security Administration for one year. As a result, the IRS assessed a Civil Penalty against our client in the shockingly large amount of $50,900.
Our client also timely mailed a federal tax deposit to the IRS paying its Form 941 liability for one quarter in full. However, the IRS took the position that the federal tax deposit should have been made electronically via its online payment system (EFTPS) instead of being mailed to the IRS.
As a result, the IRS assessed a failure to make a proper federal tax deposit penalty against our client of over $124,000! We filed two separate Requests for Penalty Abatement Based Upon the Doctrine of Reasonable Cause with the IRS seeking the removal of these penalties.
A Request for Penalty Abatement seeks the removal of penalties and interest on the penalties. It does not seek the removal of tax or interest on the tax.
After considering our arguments, the IRS agreed to remove the Civil Penalty liability in the amount of $50,900. However, the IRS rejected our Request for Penalty Abatement regarding the failure to make a proper federal tax deposit penalty in excess of $124,000.
We subsequently filed an Appeal, and the IRS finally agreed to remove the failure to make a proper federal tax deposit penalty in excess of $124,000. Our work on behalf of our client resulted in abatements totaling over $175,000.