So, did you reconcile your payroll reports for 2008? If not, you may want to check your figures.

Here's why: April is the month the IRS and the Social Security Administration (SSA) begin to match the payroll information reported on prior year quarterly and annual employment reports, and to generate notices based on discrepancies.

The program, known as Combined Annual Wage Reporting (CAWR), matches the amount of social security wages and tips, Medicare wages and tips, federal income tax withheld, and advanced earned income credit reported to the two agencies.

If those totals do not agree on the forms you filed with the IRS and the SSA, you can expect to receive a notice. Since the review covers the second and third preceding tax years, notices sent in 2010 will request information about your 2008 and/or 2007 payroll returns.

What to do if you receive a CAWR notice. First, make sure you completed all required forms for the year covered by the notice. Next, check that the IRS figures take into account previously corrected forms you submitted after the original due date of the returns in question.

Finally, respond within the 45-day timeframe shown on the notice. Otherwise the IRS will close your case and assess interest and penalties based on the information they have.

CAWR notices are sent only to you, as the employer, no matter who completes your payroll returns. If you receive one, please call. We're here to help you resolve tax issues quickly and efficiently.

Posted 5/1/10

Contact Jim Komos of Ciuni & Panichi at 216.831.7171 or jkomos@cp-advisors.com if you would like additional information on taxes and your business.

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