Deposit designation request under IRC 6656(e)

Template from tincompliance.com. Under IRC 6656(e) a taxpayer may tell the IRS which deposit periods its deposits should be applied to, and the IRS recomputes the failure-to-deposit penalty on that basis. The request must reach the IRS within 90 days of the 23C (assessment) date on the notice that first shows the FTD penalty; a request received later "cannot be considered" (IRM 20.1.4.26.3, Feb. 9, 2018). The IRS may not use the re-designation to increase the penalty unless you agree. Use the Form 945 deposit penalty calculator on tincompliance.com to test the IRS default order (most recent period first, Rev. Proc. 2001-58) against a first-in, first-out order before you send this.

[Company legal name]

EIN: [00-0000000]

[Address on file with the IRS]

[Date]

Internal Revenue Service

[Address shown on the notice]

Re: Designation of deposits under IRC 6656(e); Form [945 / 1042] for calendar year [year]; Notice [CP 161 / CP 210 / CP 220 / other] dated [notice date], 23C date [assessment date]

Dear Sir or Madam:

The above notice assesses a failure-to-deposit penalty under IRC 6656 of $[amount] on [Company]'s Form [945 / 1042] for [year]. Under IRC 6656(e) and Treas. Reg. 301.6656-1, [Company] designates the deposit periods to which its deposits for that year are to be applied, as set out below, and requests that the penalty be recomputed on that basis.

This request is made within 90 days of the 23C date shown above.

1. Designation

[Choose one and delete the other:]

(a) [Company] designates that all deposits for the period be applied on a first-in, first-out basis: each deposit to the earliest deposit period for which a liability remains unpaid at the time the deposit was made.

(b) [Company] designates the deposits listed in the schedule below to the deposit periods shown. Deposits not listed are to be applied under the default rule.

2. Liabilities

[Company]'s liabilities by deposit period, as reported on [Form 945-A / line 7 of Form 945 / the Form 1042 record of federal tax liability], are: [attach the schedule or list the periods and amounts]. The schedule filed with the return is correct and no change to the total tax is requested.

3. Request

[Company] requests that the IRS (a) apply the deposits as designated, (b) recompute the IRC 6656 penalty accordingly, and (c) abate the difference between the penalty assessed and the penalty as recomputed. If the recomputation would produce a higher penalty for any deposit, [Company] does not agree to the higher amount and asks that the lower penalty be retained, as IRM 20.1.4.26.3 provides.

[If also requesting reasonable cause on any deposit: A separate statement requesting relief for reasonable cause under IRC 6656(a) for the deposit(s) of [dates] is enclosed. That request addresses each penalized deposit specifically, with dates.]

Please send the recomputation (the FTDPN summary print) with the adjustment notice, as IRC 6751(a) requires. Questions may be directed to [name, title], [phone], [email].

Under penalties of perjury, I declare that I have examined this request, including the accompanying schedule, and to the best of my knowledge and belief it is true, correct and complete.

[Signature]

[Name], [Title: an officer of the company, or a representative under a Form 2848 that covers civil penalties for Form [945 / 1042], [year]]

[Date]

Enclosures: copy of the notice; deposit schedule with EFTPS acknowledgments; [Form 945-A / Form 1042 liability record]; [Form 2848]

Where to send it: the address on the notice. The IRS also accepts a FIFO designation orally on the number shown on the notice (IRM 20.1.4.26.3(4)); make the written request anyway so the 90-day date is documented. Keep proof of mailing. The 90 days run from the 23C date printed on the notice, not from the day you received it.