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IRS Letters about 940 Taxes and 941 Taxes
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As with personal tax issues, the IRS uses letters to communicate with taxpayers about actions they are taking or intend to take regarding unpaid employment and payroll taxes (referred to as 940/941 taxes). Below is a sampling of letters that are commonly sent regarding 940/941 tax issues.
· IRS Letter that states Final Notice – Notice of Intent to Levy and Notice of Your Rights to a Hearing. Please Respond Immediately. This letter from the IRS serves as notification about the intent of the IRS to levy bank accounts and other financial assets resulting from unpaid employment and payroll taxes (940/941). This IRS letter is similar to the Final Notice of Intent to Levy letter that is sent to taxpayers who owe personal tax. As with the other IRS Letter of Final Notice, this letter is precisely what it says – FINAL. There is a provision with this letter to request a Collection Due Process Hearing which can temporary halt IRS Levy action until a hearing is held when alternatives to collection actions can be addressed with the IRS.
This letter is often sent to anyone at a company who has signature authority related to finances or payroll. This letter is typically signed by a Revenue Officer. Civil Penalties can apply here.
· IRS Letter that states Certified Copy of Notice to Federal Tax Lien and Right to a Hearing. This letter from the IRS serves as notification that a federal tax lien is being placed on official records for unpaid employment and payroll taxes (940/941). This lien is also typically signed by a Revenue Officer.
· IRS Letter that states Attempt to Collect Unpaid Employment Tax. This letter from the IRS serves as notification that the IRS is bringing collection actions against the taxpayer for unpaid employment tax. The IRS interpretation is that the unpaid employment tax is stolen because it is presumed taken and not deposited as required. Penalties for this issue can be severe.
· IRS Letter that states Notice of Levy on Wages, Salary and Other Income. This letter from the IRS is notification that financial assets have been taken as a result of unpaid employment and payroll taxes. This letter from the IRS is similar to the one sent to taxpayers who owe personal income taxes. The IRS converts the tax to a civil penalty.
· IRS Letter that state Notice of Summons. This letter from the IRS is serious and is typically sent from a Revenue Officer. It is important to respond to the IRS Notice of Summons because failure to take action on the IRS Summons will trigger non compliance to the IRS Summons and could have severe consequences. The IRS uses the Summons action to force taxpayers to bring financial, tax and business documents to a hearing. The inability to present any documents on the requested items list will trigger non compliance with the IRS Summons which can have severe consequences.
The IRS takes 940/941 tax issues very serious so attention to these IRS letters is extremely important. Please contact a Tax Consultant if you receive any IRS letters.
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