Why Does My Business Owe A Civil Penalty?

The most likely answer is that the Social Security Administration (SSA) and IRS are missing your W2 and W3 forms for a certain tax year. If you haven't filed your W2s/W3 with the SSA, you're business is at risk of being assessed a Civil Penalty, which can run as high as $1,500,000 per year.

Will The IRS Remove My Business Civil Penalty?

In my experience, the IRS is very liberal when it comes to abating Civil Penalties that have assessed to businesses. However, it is much easier to avoid the Civil Penalty assessment altogether than to request the removal of it. Prior to assessing the penalty, the SSA and IRS will send notices to the business advising of the missing documents and giving the business the opportunity to provide the completed forms.

My advice is that you always open your IRS notices and Letters, read them carefully and respond to them promptly. In this case, sending in your W2/W3 forms when requested will prevent a big headache and a bigger, avoidable tax debt down the road.

How Do I Request The Abatement Of My Business Civil Penalty?

The IRS will send you a letter advising your business that the Civil Penalty has been assessed. You will need to gather the missing W2/W3 forms, write a letter requesting the abatement of the Civil Penalty, include the reasons the forms were not filed timely with SSA. Then mail your written request and W2/W3 forms to the IRS address on the notice. Be sure to mail your documents certified receipt, follow up your mailing with regular phone calls to the IRS number on your notice. This will help ensure that your request has been received and is being considered by an IRS representative.