What to do if you get a tax notice from an agency

1. Identify if the notice is coming from the IRS or a state agency.
   • The agency name is usually listed at the top of the notice.
2. Verify that the tax agency is Gusto-supported.
   • Check here for the list of agencies supported by Gusto.
     • If the agency isn’t supported, we’re unable to assist in the resolution and the notice should be handled outside of Gusto.
3. Confirm whether Gusto was your reporting agent at that time by identifying the tax period listed on the notice.
   • Gusto’s authorization to file and pay on your behalf begins in the quarter that your first official check date with Gusto falls in. 
     • If the tax period is prior to your first check date in Gusto, or after your suspension/cancellation date with Gusto, you must reach out to the previous (or next) payroll provider for the specific time period for additional assistance.
       • ‘Check date’ is separate from the pay period or the date the payroll was processed. 
       • To find your first check date with Gusto: head to Reports section, then scroll to and click the Paystubs tile, then click the Choose a check date dropdown and scroll to the bottom of the list.
4. Verify that all information listed on the notice matches what’s listed in your Gusto account.
   • This includes, but is not limited to:
     • Company Address
     • Deposit Schedule
     • Tax Rate
     • Account ID/FEIN
     • Company Name
   • If any of your account information is inaccurate, please update your Gusto account settings as soon as possible.
5. Determine what the notice is about (i.e. rate change, deposit schedule update, late/missing penalty) and if any action is required.
   • If the notice is regarding an upcoming change to your deposit schedule or unemployment tax rate, you can make the requested change in Gusto without our assistance:
     • Update your unemployment tax rate.
     • Update your federal deposit schedule.
     • Update your state deposit schedule.
   • If you can't resolve the notice on your own in Gusto, are unsure what the notice is in reference to, or the tax notice has a missing payment or balance owed, follow the steps in the Report and upload a tax notice in Gusto dropdown below.
     • Our tax specialists will help research and determine the next steps required to resolve the issue.
6. Review any upcoming deadlines that may be listed in the notice.
   • If there’s an upcoming deadline that may pass before Gusto is able to assist, contact the tax agency by phone or email to request additional information or to request an extension and/or hold on the account in the meantime. 
     • Most tax agencies will include contact information on the notice itself.
     • A Gusto tax specialist is usually assigned to your case within 4-6 weeks. If you have Priority support: a Gusto tax specialist is usually assigned to your case within 1 week.

Common types of IRS notices  

Deposit schedule change

The IRS sets your deposit schedule for Federal Income Tax based on your previous deposit amounts during the ‘lookback period'. Your company will be assigned a semi-weekly or monthly deposit schedule.

If the IRS changes your schedule, they’ll send a notice to let you know.

• Make sure to note the effective date of the new schedule—it’s important to deposit your taxes on time to avoid penalties and interest. 
• Follow the steps in the article to update your deposit schedule in your Gusto account.

Refund

An overpayment of taxes can result in a credit owed to your company. If this is the case, you’ll receive a notice letting you know. 

• If you’re unsure why the credit exists, reach out to the IRS directly for additional information. 
• If you still have questions, before you request the refund or cash a refund check, follow the steps in the Report and upload a tax notice in Gusto dropdown below.
  • Important: If an overpayment is refunded in error and the refund is accepted, the business may be liable for penalties and/or interest on the refunded amount in the event it needs to be paid back to the agency. 

Amount due 

If the notice contains an amount due:

1. Call the IRS to request additional information or to request an extension and/or hold on the account in the meantime until Gusto can assist. 
2. Follow the steps in the Report and upload a tax notice in Gusto dropdown below so our tax specialist team can review and assist.   

Common types of state notices

Deposit schedule change

Just like the IRS, if a state agency changes your State Income Tax deposit schedule they’ll send a notice to let you know. These generally come at the end of the year for the following year, but it’s good to always be on the lookout. 

Some states will follow your federal deposit schedule and some will not. If your state has a separate schedule, you can update it by navigating to the 'State Tax Setup' section of your Gusto account and following steps 2-4 in this article.

Unemployment rate updates 

Individual states will audit your company’s unemployment tax rate annually and decide if it aligns with your company’s history. If your unemployment tax rate changes, they’ll send a notice letting you know what the new rate is and when it will be effective. 

Make sure to update the unemployment rate in Gusto before the effective date on the notice. 

Refund

An overpayment of taxes can result in a credit owed to your company. If this is the case, you’ll receive a notice letting you know. 

• If you’re unsure why the credit exists, reach out to the agency directly for additional information. 
• If you still have questions, before you request the refund or cash a refund check, send the notice in full to [email protected] for review.
  • Important: If an overpayment is refunded in error and the refund is accepted, the business may be liable for penalties and/or interest on the refunded amount in the event it needs to be paid back to the agency. 

Amount due

If the notice contains an amount due:

1. Call the agency to request additional information or to request an extension and/or hold on the account in the meantime until Gusto can assist.
2. Follow the steps in the Report and upload a tax notice in Gusto dropdown below so our tax specialist team can review and assist. 

If you can’t make the updates in Gusto, are unsure what the notice is in reference to, or the tax notice has a missing payment or balance owed, follow the steps below to report it to us.

1. Click the Taxes & compliance section and select Overview.
2. Under “Quick links”, click Report a notice.
3. Click Get started.
4. Enter the year and timeframe the notice applies to.
   • Look for this at the top of the notices—if you don't see a date, select "no date shown".
5. Fill out the remaining prompts.

Based on the information entered, we’ll determine some next steps.

If your notice is from a time period before you joined Gusto

Gusto’s authorization to file and pay on your behalf begins in the quarter that your first official check date with Gusto falls in–since we didn’t file taxes for you during that quarter, we can’t help with the notice. 

• To find your first check date with Gusto: head to Reports section, then scroll to and click the Paystubs tile, then click the Choose a check date dropdown and scroll to the bottom of the list.

Here are a few options you can take to move forward:

• Reach out to your previous payroll provider and ask for help
• Contact the agency that sent the notice and ask for next steps
• Consult your CPA. If you don’t have one, search for one in our directory

We may need to take a look at the notice

Upload a scan, screenshot, or high quality image of the document. Make sure to include all the pages of your notice, but only one at a time. If you have another notice, report it separately.

Once submitted, it’s been added to our queue and we’ll review it as soon as possible. Some notices are more complicated than others—you can expect a response in a few weeks. After we review your notice, we’ll email you with next steps.

Notice: Unemployment Compensation Contribution Rate Notice for Calendar Year 20XX.  

Issuing agency: The state department that’s responsible for collecting unemployment tax, which varies by state.

Action needed: Update the unemployment rate in your Gusto account. To do so, click the Update your SUI rate in Gusto dropdown of this article.

Please reference the table at the bottom of this article to find out if your particular notice has any special instructions in addition to the steps below.

Details: This notice is to inform you of a change to your unemployment rate and the day it will become effective—usually listed at the top. For example, it might say “Your employer contribution rate effective 01/01/2019 is 0.055555.”

To update your rate in Gusto:

1. Click the Taxes & compliance section and select Tax setup.
2. Click Manage Taxes under the applicable State Tax section.
3. Scroll to State Tax Settings and click edit next to SUI Rate.
4. Select to Add a new rate.
5. Enter the number shown on the notice as a percentage rate. For example, if your notice says you have a rate of .055555, enter 5.5555%.   
6. Set the Effective Date to the effective date listed on your notice, typically the beginning of the current year or quarter (January 1, April 1, July 1, October 1).
   • Note: If you're making this update after the deadline listed on the notice, you will be responsible for any penalties the agency applies to your account.
7. Click Save.

What to expect after making a rate update in your Gusto account

Note: After you’ve followed the steps above and contacted the agency, if assistance is still needed, you can send the notice to Gusto—agencies will never send these notices to Gusto directly.

If you see your notice on the table below, reference the special instructions column.

State or local withholding tax deposit schedule notice

This notice is to inform you of a change to your withholding tax deposit schedule and the day it will become effective—usually listed at the top.  

For example: a notice might say “We determined your new deposit schedule for the new tax year."

Issuing agency

State or local tax agency responsible for collecting withholding income tax.

Action required

Determine the new withholding tax deposit frequency (e.g. semi-weekly, monthly, quarterly) and update it in your Gusto account.

Update a state or local tax deposit schedule in Gusto

1. Click the Taxes & compliance section and select Tax setup.
2. Click Manage Taxes under the applicable state tax section.
3. Click Edit next to “Deposit Schedule / Company Filing Status” under the State Tax Settings headline.
   • If you don't see the option to edit your deposit schedule, it means your schedule matches the federal deposit schedule or Gusto uses a default schedule for all customers in that state and no action is needed.
4. If the effective date is in the future or in the current quarter, select Add a new setting. If the effective date on the notice is from a previous quarter, click Make a correction.
5. Set the Effective Date to the date listed on your notice, typically the beginning of a year or quarter (i.e. January 1, April 1, July 1, October 1).
   • Important: If your tax deposit frequency is increasing (e.g. monthly to semi-weekly) and you make this change after the effective date on the notice, there may be penalties or interest assessed for late tax payments which you’ll need to pay directly to the agency.
6. Click Save.

IRS withholding tax deposit schedule notice

Gusto defaults to depositing on the faster semi-weekly schedule in order to prevent late tax payments, penalties, and tax delinquency notices. Unless you've specifically asked Gusto to make your payments monthly, no action is needed.

If you specifically asked Gusto to deposit using the monthly schedule, you must contact us from the Help section of your account if the IRS changes your schedule to semi-weekly. If not done immediately, there may be penalties and interest assessed for late tax deposits–these would be the employer's responsibility to pay.

Sometimes notices are sent as a result of filing and/or payment errors. If Gusto has notified you that we were unable to successfully file or make a payment on your behalf, this could be for a few reasons. 

Unfortunately, tax agencies do not always provide a specific reason for the failed attempt(s) to file and pay. In order to fix the issue, you'll need to reach directly out to the tax agency for additional details and instructions. Agency contact information for your state can be found here.

Common reasons for failed filings or payment errors

Review each potential problem listed below, and ask the agency which issue might be causing the failed filing. 

What to say to the agency

 “Hi this is (your name) from (your company name) and our FEIN is XX-XXXXXXX. My payroll provider Gusto, formerly ZenPayroll, received an error message when attempting to file on my behalf—I would like to resolve this as soon as possible. I've got a few things I'd like to check to make sure the next time they file it’s successful:"

1. Make sure the account is "active".
   • If your state account is inactive due to no longer processing payroll in that state, you’ll need to do one of two things:
     • Close your account with the agency.
       • Head to this article and scroll to the “Closing your tax accounts with agencies” headline for more information.
     • Have Gusto set up state-wide exemptions so we don’t file to an inactive account in the interim—you MUST contact us from the Help section of your account when you hire a new employee in that state or we won’t know to file and pay the required taxes.
2. Review the "effective date" on the account.
   • This should be the beginning of the first quarter when you have a check date in Gusto for that specific state.
3. Confirm your account number matches what is listed in Gusto.
   • Find what’s on record in Gusto in the Taxes & compliance section by clicking Tax setup and scrolling to the applicable state headline.
   • If you need to update your account number, contact us from the Help section of your account—there may be tax implications we need to help with (like payments made to an incorrect account number, etc).
4. Confirm your company name and filing/mailing address in Gusto matches what the agency has on file.
   • Find what’s on record in Gusto by heading to the Company section and clicking Company details.
5. Make sure the FEIN on file with the agency is what Gusto has on record so the account can be verified.
   • Find what’s on record in Gusto in the Taxes & compliance section by clicking Tax setup.
6. If required, make sure that Gusto has Third Party Authorization (TPA) or Power of Attorney (PoA)—the effective date should be on or prior to the first date of the quarter(s) in question.
   • In the state tax registration section of the Help Center, go to the applicable state article and check for state and agency-specific TPA info.
7. Make sure a previous service provider isn't still listed as your reporting agent on the account.
   • If a previous provider is still listed as the reporting agent it may override Gusto's attempts to obtain access and successfully file. Work directly with the agency and/or previous provider to remove them from the account.