What to do now? (W-2 problem)

[TaxmannEA]

I just acquired a new client who has been having an ongoing problem with her W-2 filing for her business in 2016. She has 10 employees.  She mailed the W-3 and W-2s to the SSA in January of 2016. In 2019 she received a letter claiming that the W-2s had not been received, so she sent them in again. She later sent a copy by certified mail with a return receipt to the agent handling the case. 

In 2020 she received another penalty notice stating that they still didn't have the W-2s and assessing a $10,000 penalty for non-filing. This was in her mail while she was in another state with her husband who was hospitalized and eventually died. By the time she got back home, the response time was over and they tell her the only option is a Collection Due Process Hearing. She tried the Taxpayer Advocates Office, but was told that they were too busy to help at that time.

Any suggestions on how to tell the IRS that the problem is that they don't open their mail ? I've never been through a due process hearing, so any suggestions would be much appreciated.  

[Lee B]

I have had the first part happen 5 or 6 times years ago before I switched to filing online with the SSA,

but it was always resolved by responding to the first letter and mailing in the W 3/W2s.

Yeah, the Tax Advocate is swamped.

At this point I think the best option would be for her to contact her Congressperson who usually has a designated staff person to handle tax issues.

If you do that, you will need to have everything clearly documented and explained. They aren't going do research for you!

[Medlin Software, Dennis]

Many owners are also employees. Easy to use the ssa site to see if their personal earnings data is updated. Could be a way toonitor the data recording, or prove the data was actually recorded.

[mcb39]

One of the reasons why I no longer accept clients with payroll.  The system is SO broken

[Medlin Software, Dennis]

From my perspective, payroll is easy compared to income tax reporting...

There are some, to me, seriously broken parts of payroll, such as the increasing number of tax agencies profiting via required "retirement" or other "helpful" deductions (they contract out the back end processing and keep a cut as profit). The lack of common rules with items affecting all states, such as minimum time in local to trigger nexus.  But, there are many families whose living depends on a tax agency having an office to set and monitor rules - process returns etc. -  so the likelihood of a tax agency making thing easier is nil.

I saw an article about a non US jurisdiction where the tax agency monitors income and adjusts withholding on the fly so there is no need for tax returns.  How would that go over here, let alone across the US?  I struggle with this issue whenever I think about it, as simplicity has merit, but will never happen because complication leads to jobs, and opportunity to believe one is paying less tax than required.  (I often wonder if there was no opportunity to believe we beat the system, we would not care if the system was made simple.)

[Lee B]

Actually I agree, I have bee processing live payroll for 30 years now and I find doing that easier than processing Personal Tax Returns.

[michaelmars]

On 1/2/2023 at 3:45 PM, Medlin Software, Dennis said:

Many owners are also employees. Easy to use the ssa site to see if their personal earnings data is updated. Could be a way toonitor the data recording, or prove the data was actually recorded.

I had to do this with 2 clients, similar situation.  took about 5-6 years of correspondence and then one day a client got the letter saying everything is ok and the other client never heard but the letters stopped coming. 

[Medlin Software, Dennis]

I have a customer claiming they entered their checks accurately but the irs is telling them they did not. Never ends, but ensures employment… I expect it is a data entry or setup issue, but I can’t be sure until I see their data. It is never productive to believe verbal information fully or to let it taint my thoughts prior to seeing the data. 

[Max W]

The best way to have gotten this resolved is with a Collection Due Process hearing  (CDP), form 12153.

However, there is a time limit on this of one year from a notice to levy, or a lien filing notice.  Since the penalty  assessment was in 2020, it may be too late.  (see the instruction pages of form 12153).

 

 

[Medlin Software, Dennis]

To maybe add some prevention, there is merit to using a PMB service for all important mail.  For PMB services, many will have scanning ability, and all will have forwarding ability (sometimes only forwarding what you select via their images).

For USPS, their informed delivery ability is pretty good for letters, postcards, and packages, to be able to see what is on the way.  The flaw is things like a 9x12 don't create an image, just a notice that "something" is being delivered.

Similar for important email messages.  Use an email service which offers NO filtering before delivery (which is not going to be any of the free services!)  You can then manually, over time, select addresses, subjects, whatever, to be put in spam on your local machine(s).  That is the ONLY way to be sure to get all important messages.