Resources

Thomson Reuters Tax & Accounting News

Featuring content from Checkpoint

Back to Thomson Reuters Tax & Accounting News

Subscribe below to the Checkpoint Daily Newsstand Email Newsletter

IRS announces resolution to problem that resulted in erroneous failure-to-deposit penalties

IRS webpage, “Emancipation Day FTD Penalty Error” (updated May 20, 2016)

IRS has announced on its website that it has resolved the programming error that caused some monthly and daily deposits of taxes that were made timely by Apr. 18, 2016, but after Apr. 15, 2016, to be considered as paid late even though April 15 was a federally observed legal holiday (Emancipation Day) in the District of Columbia.

Background. The 2016 federal tax deposit deadline for monthly and daily tax deposits was extended to Apr. 18, 2016, since Apr. 15, 2016 was a holiday in the District of Columbia.

On May 10, IRS announced that, in some instances, taxpayers were assessed failure-to-deposit penalties as a result of a programming error that treated some monthly and daily deposits of taxes that were made timely by April 18, but after April 15, as paid late. See Weekly Alert ¶  7  05/19/2016.

IRS announces resolution of the error. IRS says that its systems have been corrected and that impacted taxpayer accounts will be updated. No taxpayer action is required. Taxpayers who received a notice (CP161) of a failure-to-deposit penalty as a result of this error will receive follow-up correspondence indicating that they do not owe a penalty. Taxpayers who received a notice (CP276B) indicating that their deposit was made incorrectly but that IRS waived the penalty will not receive any follow-up correspondence.

References: For failure to deposit penalty, see FTC 2d/FIN ¶  V-1650  et seq.; United States Tax Reporter ¶  63,014; TaxDesk ¶  862,000  et seq.; TG ¶  71623.