CP207: your payroll tax liability schedule needs fixing

What a CP207 means

A CP207 says your deposit schedule, the Record of Federal Tax Liability (the ROFTL, such as Schedule B for Form 941), has missing or incorrect information, and the IRS needs a new one. [1]source 1

It matters because the IRS uses the schedule to test whether each deposit was on time. Without a usable one, it averages your liability across the period and figures deposit penalties on that basis. [1]source 1

So a short, careful reply now can prevent a penalty built on an average rather than your real paydays.

Why people get one

• The schedule had incorrect, missing, illegible or negative entries, or its total didn't equal the total tax on the return. [1]source 1

First steps

1. Read the notice for the return and period involved. [1]source 1
2. Rebuild the schedule from payroll records: each month's total liability for a monthly depositor, or the liability for each pay date for a semiweekly depositor. [1]source 1
3. Report liabilities, not deposits, with no negative amounts; apply any decrease to the matching liability without going below zero. [1]source 1
4. Check that the schedule's total equals the total tax on the return, then mail it to the address on the notice. [1]source 1
5. If a deposit was late for a good reason, include a statement signed under penalty of perjury. [1]source 1

What not to do

• Don't skip the reply. The IRS says it will figure the penalty by averaging your liability if you don't. [1]source 1
• Don't list deposits on the schedule; it records liabilities only. [1]source 1
• Don't pay through a link or phone number in an unexpected email or text. Use irs.gov, typed in yourself.

Related notices

• Related CP276A A warning, with no penalty this time, about the same kind of schedule problem.
• Related CP136B The notice that sets your deposit schedule.

Keep reading

• Form 2848 (power of attorney)

Questions