What we have done

HICKS & ASSOCIATES, CPAs

Representation before the IRS

Successfully handling of an appeal of IRS findings

Synopsis: The client was fined $10,748.35 for late payment of a large payroll deposit. The client's accountant requested a waiver on the penalty. The waiver was denied. The problem was turned over to us and on appeal the IRS agreed with our position and waived the penalty. Details are described below.
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The circumstances of the client were as follows; An employee of the company gave form 8109 and a check for the amount of payroll tax due, to the bank teller with a number of other bank deposits on December 3. The bank teller failed to process the payroll deposit and returned the unprocessed document with the deposit slips. The employee of the company took the deposits slips back to the company and put the information in a folder for the accountant. The outside accountant, upon reviewing the information at the end of the month found the problem. The deposit was immediately made.

Because of the size of the required deposit the IRS levied a fine of $10,748.35 The accountant for the company requested a waiver of the penalty. The IRS denied the request.

At that point the problem was turned over to us. We requested an appeal of the findings and made the following points on appeal:

The question on appeal was what constitutes reasonable cause or due diligence. We felt reasonable cause and due diligence were accomplished because of the following: (reference Treasury regulations on penalties under sections 301.6721-1, 301.6722-1 and 301.6723-1)

Significant Mitigating Factors; The fact the filer has an established history of complying with the filing requirements constitutes a mitigating factor.

Events beyond the filer's control; Certain actions of an agent (as described in paragraph ©(5) - When the employee turned the deposit over to the bank (as required by IRS regulations) then the Bank became the agent of both the company and the IRS. The fact this agent did not handle the deposit correctly and in a manner normally expected of them constitutes events beyond the company's control.

Responsible Manner; In the normal course of business multiple deposit information is not verified while standing in line at the bank

(Reference IRS regulations code section 6662(e); --- a penalty is excused if the taxpayer, based upon the data that was reasonably available to it, reasonably concluded that it's analysis was the most reliable and satisfied the documentation requirement of the regulations.

Our appeal process was more detailed then this but the above information shows the essence of our position and as indicated the IRS agreed and the penalty was waived.