24 Has anyone tried calling the Taxpayer Advocate Service instead of dealing directly with the IRS? I've heard they can sometimes help with penalty abatement requests when there are extenuating circumstances like caring for ill family members.

I'm dealing with a similar situation right now - got hit with an underpayment penalty after filing my return. Reading through all these responses has been really helpful, especially the clarification about using Form 2210 vs Form 843. One thing I wanted to add is that when you're writing your explanation letter, be as specific as possible about the timeline of events. In my case, I'm documenting exactly when my family emergency occurred and how it overlapped with the quarterly payment due dates. I think showing that clear connection between the circumstances and the missed payments strengthens the case for "unusual circumstances." Also, if anyone has medical documentation (hospital records, doctor's notes, etc.) that shows the severity and timing of family health issues, include copies with your Form 2210. I've read that the IRS appreciates concrete evidence rather than just a written explanation. Thanks to everyone who shared their experiences - it's given me confidence that there's a good chance of getting this penalty waived with the right approach!

I run a small business and got absolutely DESTROYED by one of these ERC mills last year. They convinced me I qualified for $175,000 in credits, took their 28% fee ($49,000!!), and then disappeared when the IRS sent me a notice questioning the claim. Now I'm working with a real CPA to sort through this mess, and it turns out I probably only qualified for about $30,000 in legitimate credits. So I'm potentially on the hook to repay $145,000 PLUS penalties and interest. Meanwhile, the ERC mill is nowhere to be found, and their website is down. The worst part is their contract specifically stated they're "not tax preparers" even though they literally prepared and filed the amended returns. They also claimed no responsibility for audit results. I'd 100% support banning these contingency fees.

Coming from a tax policy perspective, this move by the IRS makes perfect sense. The ERC mills exploit a regulatory gap - they're not technically "tax preparers" under current definitions even though they're preparing amended returns to claim tax credits. Something similar happened with the EITC (Earned Income Tax Credit) years ago. Preparers would charge huge contingent fees to file for credits that taxpayers often didn't qualify for. When regulations tightened around EITC claims, the accuracy of claims improved significantly. The big difference is timing - EITC fraud can be caught during initial processing, while ERC claims are often paid out first, then audited later. This means businesses can be hit with unexpected repayments years later, long after they've spent the money.

This happened to me too! The key thing to understand is that the safe harbor rules changed slightly after all the COVID relief expired. During COVID years, the IRS was much more lenient with underpayment penalties. What fixed it for me was adjusting my withholding at work by submitting a new W-4. Instead of trying to be precise, I just added a specific additional amount to be withheld from each paycheck (Line 4c on the W-4 form). I took what I owed last year, added a bit more as a buffer, then divided by the number of pay periods remaining in the year. Also definitely look into first-time penalty abatement if this is your first time getting hit with the penalty!

Just wanted to mention that the underpayment penalty rules changed slightly after the TCJA (Tax Cuts and Jobs Act) as well. It used to be that you could avoid the penalty by paying 90% of your current year tax OR 100% of your prior year tax (110% if your AGI was over $150k). Under TCJA, they briefly adjusted the 90% threshold down to 80% for one tax year, but then it went back to 90%. Some taxpayers got confused by this temporary change and didn't realize it reverted back. Also, the IRS uses a quarterly assessment for underpayment - meaning they look at when you made payments throughout the year, not just the total by end of year. If you made a lot of money early in the year but your withholding was more evenly distributed, that could trigger a penalty even if previous years didn't.

You're absolutely right about the documentation being key here. I've been dealing with this exact issue in my construction business for years. The IRS doesn't actually require you to get W-9s from every single day laborer - that's a common misconception that causes a lot of unnecessary stress. Here's what I learned from my tax attorney: for occasional workers paid under $600 annually, you just need to maintain adequate records showing the expense was ordinary and necessary for your business. This means keeping a simple log with dates, amounts paid, work performed, and ideally some form of acknowledgment from the worker (even just a first name and signature on a receipt). For your ATM records, you can definitely use those as supporting documentation. Create a log that matches your withdrawal dates to specific jobs, noting how many workers you hired, what work they did, and how much you paid each person. Photos of the work being done can also help establish the business purpose. The $600 threshold is per individual worker per year, not total payments to all workers. Since you're using different people each time, you're likely not hitting that threshold with any single worker. Just make sure you're consistent with your documentation going forward - the IRS values consistency and good faith effort to maintain proper records.

I've been running a small electrical contracting business for about 8 years and dealt with this exact same issue. The key thing to understand is that the IRS cares more about whether you can prove the expense was legitimate and business-related than having perfect W-9 documentation for every single person. Here's what worked for me: I created a simple "Daily Labor Log" that I keep in my work truck. For each job where I hire day laborers, I write down: date, job address, worker's first name, hours worked, rate paid, total amount, and what specific work they did. I also have them initial next to their entry - most people are fine with this since it's not asking for sensitive info. For your past expenses, definitely create that reconstruction log matching your ATM withdrawals to specific jobs. Include as much detail as you can remember - job locations, approximate dates, what work was needed, how many people you hired. This shows the IRS you're making a good faith effort to maintain proper records. The separate cash account idea mentioned above is genius - I wish I'd thought of that years ago. It would make everything so much cleaner come tax time. You're definitely on the right track with wanting to document these properly - these are legitimate business expenses that you absolutely should be able to deduct.

I had this exact same confusion when I first saw the DD code on my W2! It's one of those things that seems like it should be important for your taxes but actually isn't. I spent way too much time trying to figure out if I could somehow use that amount for tax planning. One thing that helped me understand it better was realizing that this reporting requirement was added relatively recently (around 2012) as part of the Affordable Care Act. The government wanted better visibility into healthcare costs, so now employers have to show the total value of the health benefits they provide. It's actually pretty interesting to see the full cost breakdown - I had no idea my employer was contributing so much toward my health insurance premiums. Makes you appreciate that benefit a lot more when you see the real numbers!

This is such a common source of confusion! I work in HR and we get questions about Box 12a DD all the time during tax season. Just to reinforce what others have said - this is purely informational and represents the total cost of your employer-sponsored health coverage for the year. One thing that might help put this in perspective: this amount often surprises people because it shows what health insurance actually costs when you see both portions combined. For example, if you pay $200/month through payroll deductions and your employer pays $800/month, you'd see $12,000 in Box 12a DD ($1,000 x 12 months). The key thing to remember is that you can't do anything actionable with this number for tax purposes - it's not deductible, it's not taxable income, and it doesn't affect your retirement contribution limits. It's just the government's way of tracking healthcare spending across the economy. Hope this helps clarify things!