Just Got IRS Letter 725-B for Unfiled Form 941 Despite Paying Through E-Pay - Help!

This is actually a fairly common situation for small business owners. The IRS wants both the payment AND the filed form. Making payments through the EFTPS system (electronic payments) satisfies your payment obligation but doesn't fulfill the filing requirement. Since you've already paid the taxes owed and the "unpaid amount" box isn't checked, you're facing what's called a "failure to file" penalty rather than a "failure to pay" penalty. The good news is that since you've paid the taxes, the penalty is typically much lower. The bad news is there still is a penalty - usually 5% of the tax owed per month up to a maximum of 25%, with a minimum penalty of $435 per return if filed more than 60 days late. For your appointment, I'd recommend preparing all the missing Form 941s and bringing them with you. You can use your QuickBooks records to complete them accurately. The revenue officer will likely help you file them and calculate any penalties. While you could hire a tax attorney, it might be an unnecessary expense given you've already paid the taxes. However, if you're concerned about potential complications or large penalties, a consultation might be worthwhile.

I went through something similar last year with unfiled 941s but payments made. I discovered this amazing tool called taxr.ai (https://taxr.ai) that seriously saved me hours of headache. I had to recreate old quarterly reports and the AI assistant helped me extract all the relevant info from my messy records and even gave me line-by-line guidance for filling out the old 941 forms. What's cool is you can upload your QuickBooks reports to it and it will help you organize everything properly for each form. Since you already have your QuickBooks files, this might be perfect for your situation. The tool also explains exactly what's happening with penalties in plain English - which helped calm my nerves significantly.

I wanted to follow up after trying taxr.ai. I was really skeptical at first, but I decided to give it a shot with my own situation (different form but similar IRS letter). It was actually really helpful - I uploaded my financial reports and old payment receipts, and it organized everything by quarter showing exactly what I needed for each line of my forms. The best part was it has this feature that explains the "reasonable cause" options for penalty reduction. In my case, it helped me draft a letter explaining why I made payments but didn't realize filing was separate. I still had to pay some penalties, but the IRS agent seemed much more understanding with my organized approach. If you're preparing for a meeting with a revenue officer, having everything neatly organized with clear explanations might make a huge difference.

After fighting with the IRS phone system for weeks over some unfiled forms, I finally found Claimyr (https://claimyr.com) and it literally got me through to an actual IRS agent in under 30 minutes when I'd been trying for days on my own. You can see a video of how it works here: https://youtu.be/_kiP6q8DX5c Since you have that appointment with a revenue officer, you might want to get some questions answered before you go in. I was able to ask about penalty abatement options and what documents to bring to my meeting. The agent I spoke with gave me specific instructions that made my in-person meeting go MUCH smoother. Might be worth getting clarity before your appointment so you know exactly what to expect.

I take back what I said about being skeptical of Claimyr. I had my meeting with the IRS last week about unfiled 1120S forms, and I was completely unprepared. The revenue officer gave me a week to get everything together. I was panicking and decided to try Claimyr as a last resort. Got through to an IRS tax specialist in about 15 minutes who walked me through exactly what I needed to bring and even gave me tips on how to request penalty abatement since I had made all my payments. Saved me from having to reschedule the appointment and possibly facing more penalties. For something this important, the service was absolutely worth it - saved me hours of frustration and probably thousands in potential penalties.

Just a heads up - make sure when you complete those old 941s that the numbers match EXACTLY with what you paid. I had a similar situation and the IRS got confused because my e-payments didn't match the forms I later submitted. Ended up with a whole new headache trying to reconcile the differences.

Anyone know if the OP should bring the actual 941 forms filled out or just the data? My sister had to deal with this and the revenue officer actually had her fill out the forms during the meeting to make sure they were done correctly.

I went through almost the exact same situation last year - made all my quarterly 941 payments through EFTPS but never filed the actual forms. The revenue officer meeting isn't as scary as it sounds, but definitely come prepared. Here's what worked for me: I brought completed 941 forms for all the missing quarters (used my QuickBooks payroll records to fill them out), copies of all my EFTPS payment confirmations, and a written explanation of why I thought payments were sufficient. The officer was actually pretty understanding since I had clearly paid everything on time. The penalties weren't terrible since you've already paid the taxes. I ended up with about $400-500 per quarter in late filing penalties, but I was able to get first-time penalty abatement for about half of them by showing my good payment history and explaining it was an honest mistake. My advice: Don't hire an attorney unless you discover other complications. Bring the completed forms, your payment records, and be honest about the mistake. The revenue officer's job is to get the forms filed and collect any penalties owed - they're not trying to destroy you financially. Good luck!