Manage your tax notice with Square Payroll
About tax notices
You received a tax notice (also known as an assessment) in the mail either from the IRS or a state tax agency. Tax notices can be purely informational or may require action to be taken; they are a way for tax agencies to communicate your account status, new filing frequency, or rate assignments for your company. You can resolve most notices on your own by verifying the information on the notice against the information in the Payroll section of your Square Dashboard.
Commonly received tax notices from federal agencies include:
Annual or quarterly filer assignments
Missing filings or payments
Credit balance or tax due
Commonly received tax notices from state agencies include:
Filing frequency changes
State unemployment rate assignments
Missing filings or payments
Credit balance or tax due
Before you begin
You need access to your Square Dashboard to confirm your taxpayer information on your notice matches what is in on file for your Square account.
Step 1: Identify the agency
Before you take action, make sure you can verify the agency that sent the notice: the IRS or a state agency.
If you received the notice from a state agency, confirm that the state agency handles payroll taxes and is supported by Square Payroll. Learn more in Square Payroll Tax Filings and Payments.
If the tax notice is not related to payroll or is from an unsupported tax agency, please contact your accountant or CPA to handle the notice. For example, if it is a sale tax notice, this is not handled by Square Payroll.
Step 2: Identify the tax period
Taxes are reported based on the pay date, and not the pay period. Confirm that your payroll was processed through Square for the tax period reported on the notice.
To confirm your first pay date:
Sign in to your Square Dashboard and select Staff & Payroll > Payroll > History.
Select the type of report and the date range you wish to view.
If your first pay date with Square Payroll lies within the tax period, proceed to the next step. If the tax period is prior to your first pay date with Square Payroll or after your final pay date with Square Payroll, please reach out to your previous or subsequent payroll provider for additional assistance.
Step 3: Verify your taxpayer information
Verify your taxpayer information from the notice matches what is shown in your Square account:
Account number
Taxpayer name
Filing or deposit frequency (applies for both the federal and state level)
You can view your taxpayer information in the Business Info and Tax Info sections of your Square Dashboard. If the information on your Square Payroll account has not been updated, update your account as soon as possible.
If your account number was previously incorrect on Square Payroll and has since been updated, contact the state agency directly to get the filing and payment(s), if applicable, moved to your correct account. Agency contact information can typically be found on the notice. If you need additional assistance moving filings or payments, contact Square Support.
Once you reviewed the notice and verified the information above is accurate, see below for guidance on commonly received notice types from the IRS or state agency.
Step 4: Take action on your notice
Option 1: Take action on your federal IRS notice
Review the options for action based on what your notice lists.
Your company is assigned as either a quarterly or yearly filer by the IRS. Once you receive your filing frequency, you can update it in your tax information settings in your Square Dashboard.
Learn more about how to update your filing frequency.
If you switched from your previous provider to Square Payroll mid-year, check your email associated with your Square Payroll account. Search for email with the subject line “Outstanding Taxes Due.” If the total balance on the notice matches the total taxes listed on the email, either contact your previous payroll provider to remit the full payment or remit payment by following the instructions on the notice
Contact the agency directly for information if you are unsure why this balance exists. Contact information should be stated on the notice.
If you still have questions, send the notice for review to Square Support.
Check the email associated with your Square Payroll account and search for an email with the subject line “Failed Withdrawal.” If the total federal taxes on the email matches the balance on the notice, remit payment directly through the EFTPS website.
Learn more about how to make federal tax payments in Square Payroll Tax Filings and Payments.
Check the email associated with your Square Payroll account and search for email with subject line “Outstanding Taxes Due.: If the total balance on the notice matches the total taxes on the email, either contact your previous payroll provider to remit the full payment, or remit payment directly through the EFTPS website.
Learn more about how to make federal tax payments in Square Payroll Tax Filings and Payments.
It is in your best interest to pay these outstanding payments as soon as possible to keep your account up to date and to avoid receiving additional IRS notices.
If none of the above applies to you, contact Square Support with your notice for additional guidance.
Contact the IRS directly for information if you are unsure why this credit exists.
If you still have questions, contact Square Support with the notice for review.
If you are unsure why you received a refund check, do not immediately cash it. Contact the IRS at 800-829-4933 directly for more information.
If you are still unsure why you received this refund check, contact Square Support to verify the validity of the check.
If a refund check is sent to you in error and the check is deposited, the original payment date will no longer be valid and penalties and interest will accrue.
Learn more about how to handle your IRS notice by visiting Understanding your IRS notice or letter on the IRS website.
Option 2: Take action on your state notice
Review the options for action based on what your notice lists.
Your business will be assigned a filing/deposit frequency every year by your state agency. Contact Square Support with your notice and we will help you update your filing frequency.
State agencies will assign your business an unemployment insurance tax rate every year. Most states send out rate notices in December. Your assigned rate is determined by various factors that differ from state to state. Update the rate in the Tax Info section of your Square Dashboard. When updating, you can choose to have your new rate take effect for the current quarter or to take effect at a future date.
Contact the state agency directly for information if you are unsure why this credit exists. Contact information should be stated on the notice.
If you switched from your previous provider to Square Payroll mid-year, Check your email associated with your Square Payroll account for an email with the subject line “Outstanding Taxes Due.” If the total balance on the notice matches the total taxes listed on the email, either contact your previous payroll provider to remit the full payment or remit payment by following the instructions on the notice.
Contact the state agency directly for information if you are unsure why this balance exists. Contact information should be stated on the notice.
If you still have questions, send Square Support the notice for review.