IRS Correcting Erroneous HIRE Act Deposit Penalty Notices

The IRS is currently correcting an error with how it applied the first quarter HIRE Act credit to the second quarter Form 941 return. The Hiring Incentives to Restore Employment Act credit allows certain employers to forego payment of their share of the Social Security taxes on wages paid from March 19, 2010 to Dec. 31, 2010 to new hires who meet certain requirements. The HIRE Act credit for the March 10 to March 31, 2010 period could not be claimed on Form 941 until the second quarter return. The mistake made by the IRS caused it to send out erroneous CP 207 and CP 276B notices to some taxpayers. The IRS has corrected the error and plans to revise any erroneous penalty assessments by September 6th.

The IRS sends out a CP 207 notice if it proposes a federal tax deposit penalty. A CP 276B notice asks taxpayers to review their records to determine if they are paying their current payroll taxes on time.