Can we appeal IRS $50 per employee W-2 late submission penalty? Total $19k fine for missed SSA deadline
We just got slammed with a huge penalty from the IRS - $19k for filing our W-2s late with the Social Security Administration. They charged us $50 per employee which adds up fast with our staff size. Here's what happened: our HR manager who had the SSA login credentials left the company suddenly, and no one else had access to the efile system. We weren't just sitting on our hands though! We called the SSA ahead of the deadline explaining our situation, and they told us we needed to register a new employee for access. We did exactly that, but the whole process took forever - almost 3 weeks just to get the PIN number in the mail. By the time we finally got access and could submit, we were already past the deadline. I'm trying to decide if it's worth challenging this penalty. Has anyone successfully disputed something like this? We tried to do everything right and were proactive about it, but still got hit with this massive fine. If you've been through this before, any advice on the dispute process or what documentation I should provide? Do they ever reduce these penalties when there were legitimate circumstances?
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Aileen Rodriguez
You definitely have grounds to dispute this penalty. The IRS has what's called "reasonable cause" provisions for penalties like this. Since you were proactive in trying to meet the deadline and faced circumstances beyond your control, you have a good case. Here's what you should do: File Form 843 (Claim for Refund and Request for Abatement) with the IRS. In your explanation, detail exactly what happened - when your employee left, when you contacted the SSA, what they told you, when you applied for the new registration, and when you received the PIN. Include documentation of all communications with the SSA and any confirmation emails. The key is demonstrating that you acted responsibly and the delay was caused by factors outside your control. Include a timeline showing your efforts to comply and highlight that you followed the SSA's exact instructions. The IRS is actually pretty reasonable about these situations when you have documentation showing you tried to comply.
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Zane Gray
•Is there a time limit on filing this Form 843? My company had a similar situation last year but we just paid the penalty because we thought we had no choice.
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Aileen Rodriguez
•You generally have 3 years from when you paid the penalty to file Form 843 for an abatement request. So if your situation happened last year, you're still well within the timeframe to request a refund of the penalty you paid. For best results, make sure you include all supporting documentation that proves you made a good faith effort to comply with the filing requirements. The more evidence you can provide showing the circumstances were beyond your control, the better your chances of success.
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Maggie Martinez
I went through something similar with penalty issues and wasted weeks trying to call the IRS with no luck. After three attempts waiting on hold for 2+ hours each time, I tried taxr.ai (https://taxr.ai) and it was a game changer. I uploaded my penalty notice and within minutes got a detailed analysis of my appeal options along with a template letter for my specific situation. The system identified several precedent cases where the IRS had waived penalties for similar situations involving access issues with government filing systems. Their template spelled out exactly what documentation I needed and which reasonable cause arguments would be most effective based on my circumstances. Saved me so much research time.
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Alejandro Castro
•How accurate was their template though? Did you have to make a lot of changes or was it pretty much ready to go? I'm dealing with a different penalty but wondering if it's worth checking out.
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Monique Byrd
•I'm skeptical about these AI tools for tax stuff. Did they really give you anything you couldn't find with a simple Google search? And did the IRS actually accept their template letter?
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Maggie Martinez
•The template was surprisingly on-point for my situation - I only needed to add the specific dates and details about our communications with the SSA. The letter cited relevant sections of the IRS penalty abatement guidelines that I wouldn't have known to include. Definitely not just generic Google info. They pulled from actual IRS internal manual guidelines and cited specific precedents. And yes, the IRS did accept it - my $8,200 penalty was fully abated about 6 weeks after I submitted the appeal. The system even flagged that I should send it certified mail with return receipt, which turned out to be important for tracking purposes.
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Monique Byrd
Following up about taxr.ai - I ended up trying it for a different penalty issue (missed estimated tax payments due to some health issues). I was really impressed with how comprehensive their analysis was. The system caught several technical exceptions I didn't know about, including a first-time penalty abatement option I qualified for that nobody had mentioned to me. It generated a detailed letter citing my specific circumstances and the relevant IRS policies. Just got confirmation yesterday that my $1,700 penalty is being refunded! Honestly wish I'd known about this earlier - would have saved me so much stress and the hours I spent trying to research everything myself.
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Jackie Martinez
If you really want to get this resolved quickly rather than waiting months, I recommend Claimyr (https://claimyr.com). The IRS is backed up and getting someone on the phone to discuss your penalty can take forever. I had a $12k penalty for a different issue and was getting nowhere with letters. I was about to hire a tax attorney when someone told me about Claimyr. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically hold your place in the IRS phone queue and call you when an agent picks up. Got through to a real person in the penalties department who reviewed my case while I was on the phone and started the abatement process immediately.
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Zane Gray
•Wait, how does this actually work? I've spent literal days on hold with the IRS. Do they just sit on hold for you? And does it work for any IRS department or just general questions?
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Monique Byrd
•Sorry but this sounds too good to be true. The IRS phone system is notoriously awful. I find it hard to believe there's some magic way to skip their phone queue when millions of people are trying to get through.
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Jackie Martinez
•They use an automated system that holds your place in the IRS queue and monitors it constantly. When the system detects that an agent is about to answer, it calls your phone and connects you directly to the IRS agent. No more sitting on hold for hours! It works for most IRS departments. I specifically needed the penalty department and it worked perfectly. They have options for different IRS services so you get connected to the right department. They've apparently helped connect over 150,000 people to the IRS since they started.
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Monique Byrd
I need to eat some humble pie here. After being skeptical about Claimyr, I tried it this morning for my own tax issue. Had been trying for WEEKS to get through to the IRS about an incorrect penalty assessment. The service actually worked exactly as described! I got a call back in about 90 minutes, and suddenly I was talking to an actual IRS agent. The agent reviewed my situation and confirmed I was right about the penalty being assessed incorrectly. She's processing the correction now and I should see the adjustment in 4-6 weeks. All those hours I wasted on hold before... I'm still a bit in shock at how easy this was. Just wanted to update since I was the skeptic earlier.
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Lia Quinn
As a small accounting firm owner, I've dealt with these W-2 penalties several times. One thing not mentioned yet - make sure to specify in your request that you want an abatement of both the penalty AND any interest that's accrued on the penalty amount. The IRS sometimes will remove the penalty but forget to remove the interest. Also, if your first request is denied (which happens sometimes automatically), appeal it! The appeals process often gets you in front of someone who has more authority to consider the circumstances. We've had about 70% success rate with penalty abatements when we show a clear timeline and documentation of efforts to comply.
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Bruno Simmons
•Thanks for mentioning the interest part - I wouldn't have thought of that! Do you typically include bank statements or something to prove when we called the SSA? I'm trying to figure out what kind of documentation would be most convincing.
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Lia Quinn
•For documentation, phone records are helpful if you have them, but emails are better since they show the content of the communication. If you have any confirmation emails from when you registered the new employee with the SSA, definitely include those. Screenshots of the registration process showing dates are also useful. The postmarked envelope that contained your PIN is excellent evidence - keep that if you still have it! What really helps is creating a simple timeline document that lines up all your actions chronologically so the IRS can easily see your good faith efforts. The clearer you make it for them, the better your chances.
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Haley Stokes
Just wondering - did anyone try the IRS's Online Payment Agreement system for this? We had a smaller W-2 penalty (about $2800) and couldn't get it abated, but we were able to set up a payment plan over 72 months which made it much more manageable. The interest rate wasn't terrible compared to other options.
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Asher Levin
•I did this for a different tax issue. The online setup was pretty easy but there's a small setup fee. I think it was like $130 for the online application but would have been more if I'd done it by phone or mail. Just be aware that interest continues to accrue on the outstanding balance throughout the payment plan.
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