LETTER 98C

IRS Letter 98C is a notice sent to employers by the Internal Revenue Service (IRS) to inform them of a discrepancy between the information reported on their employment tax returns (Forms 94X or Schedule H) and the information reported on Forms W-2. The IRS uses information from the Social Security Administration (SSA) to match wages reported on Forms W-2 to wages reported on Forms W-4 and Forms 941. If there is a discrepancy, the IRS will send the employer a Letter 98C.

There are a number of reasons why an employer might receive an IRS Letter 98C, including:

• Failure to file all required Forms W-2.
• Filing incorrect information on Forms W-2.
• Transposing numbers or entering incorrect Social Security numbers.
• Issuing Forms W-2 to employees who never worked for the company.
• Failing to report all employee wages.

If you receive an IRS Letter 98C, it is important to respond promptly. You have 45 days to respond to the letter. If you do not respond within 45 days, the IRS may close your case and assess penalties.

To respond to the letter, you should review your employment tax records and compare them to the information on the letter. If you find any errors, you should correct them and file amended returns. If you disagree with the IRS’s findings, you should explain your reasons in a written statement.

The best way to avoid receiving an IRS Letter 98C is to ensure that you are filing all required Forms W-2 correctly. You should also carefully review your employment tax records before filing your returns.

Here are some tips for avoiding IRS Letter 98C:

• File all required Forms W-2 on time.
• Double-check all information on Forms W-2 before filing them.
• Use a tax preparation software to help you file your returns accurately.
• Keep accurate records of all employee wages.
• If you have any questions about your employment tax obligations, contact the IRS or a tax professional.