Form 4669 and 4670: when the payee already paid the tax

What it does, and what it never does

A complete, signed Form 4669 is treated as "prima facie" evidence that the payee reported the income and paid the tax (IRM 4.19.26.10.7.13.1). Its effect is to abate the backup withholding tax for that payee for that year. Its limit is stated in the manual's opening definitions: "Provision of Form 4669 does not provide relief from penalties and interest" (IRM 4.19.26.2.3).

The IRS makes that limit stick with a deliberate order of operations. It assesses the gross tax first, computes the failure-to-file and failure-to-pay penalties and interest on the gross, and only then abates the tax, "ensuring no reduction of penalties and interest computed on the gross tax" (IRM 4.19.26.10.7.13.3.1). A payer with $100,000 of computed backup withholding and Forms 4669 for every payee still owes the 25% failure-to-file penalty, the failure-to-pay penalty and the interest, all figured on $100,000.

When it is not available

"IRC 3402(d) relief should not be offered where the Payer has failed to report on Form 945 and deposit tax that was actually withheld" (IRM 4.19.26.10.7.13). If you withheld from the payee and kept the money (the manual's Workstream 2), the payee's later payment of tax does not relieve you; you hold funds that belong to the Treasury. Form 4669 is for the payer who did not withhold at all.

Building a package that ties

• One Form 4669 per payee per year. A form covering two years is rejected.
• The payer may complete lines 1 through 6 (payer and payee identification, the payment type and amount). The amount on line 6 must equal the amount on the IRS's List of Payees for that payee; a rounded or partial figure is rejected.
• The payee completes Part 2: the form, schedule, line and year on which the income was reported. "Reported on my return" without those specifics is rejected.
• The payee completes the Part 3 jurat: printed name, title, signature, date and phone. The jurat text may not be altered.
• Full TINs. A truncated payee TIN is rejected, as it is everywhere in this program (IRM 4.19.26.7.1).
• Form 4670 as the transmittal, listing every 4669 enclosed and the total.

"Unless the only missing information was the signature, the Payer will need to secure a new Form(s) 4669" (IRM 4.19.26.10.7.13.2). A rejected form goes back to the payee, not to a correction pen.

The rejection checklist

The one-time 30-day extension in this program can be requested specifically to gather Forms 4669, at any point in the case unless the statute requires a quick assessment (IRM 4.19.26.10.5, 4.19.26.10.6.3). Ask for it early; there is no second one.

What the payee is signing

Payees should know two things before they sign. The statement is under penalties of perjury and must point to a specific line of a filed return. And every accepted Form 4669 is forwarded to the IRS's Employment Tax workload selection function "for compliance review" (IRM 4.19.26.10.7.13.3.3). The form is a sworn statement that the income was reported; the IRS may check.

After acceptance

If you have not yet paid, the tax is abated on assessment and the penalties and interest are billed on the gross. If you already paid the full amount, the refund of the abated tax requires a Form 945-X netting the accepted Forms 4669 (IRM 4.19.26.14.4.3). Interest is never abated by the unit: "Reasonable cause is never the basis for abating interest" (IRM 4.19.26.11.5).

Questions people ask