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noncompliance. These notices can relate to withheld taxes, amended returns, missing documentation, or Power of Attorney filings. The challenge? All notices are time-sensitive, and failing to act on them can snowball into more severe consequences, including penalties, interest accruals, audits, or even disrupted business operations. Notices, also, on their face, can be difficult to interpret and decipher. Determining what aspect of compliance they apply to, for what time period (could be years previous), and how much any penalty amount would be can confound even seasoned payroll professionals. The Reality: How Easy It Is to Trigger a Tax Notice For global payroll professionals unfamiliar with the U.S. system, the volume and specificity of U.S. tax communications can be surprising. Consider a few real- world examples: A payroll processor misclassifies an employee’s state of residence, triggering a notice for incorrect state tax withholding. A company expands into new states but fails to register for
state unemployment insurance, prompting a compliance alert from the unemployment authority. A delay in mailing a quarterly return due to staffing shortages results in an automatic late-filing penalty, even when the tax was paid on time. Each of these scenarios can initiate a cascade of agency notices. And in a high-volume environment— like a payroll service provider managing thousands of clients or a corporation operating across 30+ states—it becomes increasingly difficult to manage responses to each one. Time Is Money: The Cost of Delayed Response Agencies usually provide a limited window (15 to 30 days) to respond or appeal. Miss that, and the financial penalties begin to accrue. Even worse, unresolved notices can impact future filings or the ability to perform business in that jurisdiction, creating administrative backlogs and regulatory flags that affect other parts of the organization, including reputational damage and lost productivity. Companies must ask these questions: How confident are we
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GLOBAL PAYROLL MAGAZINE ISSUE 13
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