Letter 6112-A: Proposed Form 945 prepared by the IRS

What Letter 6112-A is

The second and final letter in the backup withholding compliance check. Encloses a Form 945 prepared by the examiner, an explanation of the computation, the payee list and Publication 5. If no signed return arrives by the due date the IRS files a substitute return under IRC 6020(b) and assesses tax, a 25% failure-to-file penalty, failure-to-pay or failure-to-deposit penalties, and interest.

The deadline

30 days. This is the appeal-rights letter; a written protest must arrive before the due date.

What to do

Even if you agree you owe the tax, sign and return the Form 945 rather than letting the IRS assess: First Time Abate is available only on a return you filed or signed, never on a 6020(b) return (IRM 4.19.26.11.2.4). Include a liability schedule or every deposit is treated as late.

The IRS-prepared Form 945 and why you should sign your own

Letter 6112-A closes the backup withholding compliance check. The examiner has taken the 1099s you filed with no payee TIN, computed 24 percent of the reported payments for every payee you did not clear in response to Letter 6112, and prepared a Form 945 for the year showing that amount as tax due. If no signed return arrives by the date on the letter, the IRS files that return for you under IRC 6020(b) and assesses the tax along with a failure-to-file penalty of up to 25 percent, failure-to-pay or failure-to-deposit penalties, and interest from the original due date. The letter is also where appeal rights attach: a written protest received before the due date goes to Appeals, and nothing received after it does.

The strongest single piece of advice for this letter is to sign and file your own Form 945 even when you agree with every number. First Time Abate, which removes the failure-to-file and deposit penalties for a filer with a clean three-year history, is available only on a return the taxpayer filed or signed. It is never available on a 6020(b) substitute, and the difference on a large assessment is the entire penalty.

Filing it properly

Prepare the Form 945 from your own records where they differ from the examiner's, attach a Form 945-A showing the liability by date, and sign it. Without the liability schedule every deposit, and the whole assessment, is treated as if it were due on the earliest date and the deposit penalty is computed at its maximum. If you dispute some payees (you have since found dated W-9s, or Forms 4669 from payees who reported the income), file the return with the figures you believe are right and attach the protest explaining the difference, so that the agreed portion posts as your return and the disputed portion goes to Appeals. If you need the one 30-day extension, ask before the due date; Letter 686-B confirms it, and there is no second one. After the return posts, request First Time Abate on the penalties by phone or letter, and pay the tax or set up an installment agreement so that the balance does not move into collection while the penalty requests are pending. The compliance check guide covers the whole sequence, including the Form 4669 route and what Appeals will and will not consider.

Questions about Letter 6112-A

Have a different notice? The IRS notice decoder lists all 77 in the order they tend to arrive.