How to Resolve a Failed Tax Payment or Filing

If you’ve received a tax notice or discovered that a tax payment or filing didn’t go through, it usually means some setup information is missing or needs to be updated. 

Issue

You received a notice or alert about a delinquent, missing, or incorrect tax filing. The most common reasons include:

• A change in your tax rate or filing frequency that hasn’t been updated in 7shifts'
• A missing or incorrect Tax ID
• Incomplete Third-Party Authorization (TPA) access in your tax agency portal
• Outdated or incorrect tax rate settings
• A failed tax payment or filing due to missing setup information
• An unremittable tax payment (refunded back to the employer when the agency cannot process it)

These issues can lead to underpayments, overpayments, or failed filings until corrected.

What To Do

Here are a few things you can spot check:

1. Check your tax rate settings by heading to Payroll > Business Settings > Tax Setup. Confirm all Tax IDs and rates are up-to-date. Or, resolve the notice with the relevant agency if needed.
   
   For example: Your 2025 tax rate may differ from your 2024 rate. Update the new rate in 7shifts effective on the date mentioned in the notice.
2. Verify Third Party Administrator (TPA) by heading to your agency portals (state and federal). Confirm that TPA access is active and linked to 7shifts Payroll. Missing TPA access prevents Check from filing or paying taxes on your behalf.
3. Check the quarter or tax period the notice refers to. If it predates your 7shifts Payroll setup, the notice may relate to a previous payroll provider.

Issue Unresolved

If your setup appears correct, but you still received a notice, here’s what may have happened to your tax payment:

• The Payment Is Refunded to You (Unremittable / Payment Rejected)
  
  This happens when the tax agency is unable to process the payment due to a critical mismatch or missing information (i.e., an incorrect Tax ID, outdated filing frequency, or missing TPA authorization).
  When this occurs, our payroll partner, Check, will refund the funds back to your bank account. Even though the payment was refunded, the tax is still considered unpaid, and the agency will show a balance due until the issue is corrected, and the payment is resubmitted.
  
  Refund timing depends on the tax type and agency and is not immediate. In most cases, refunds are processed after the quarter is reconciled and may take several weeks.
  
  Refund handling differs by tax type. State tax payments may be refunded by our payroll partner if unremittable, while federal tax payments are handled directly by the IRS and may require employer follow-up to resolve or reapply funds.
   
• The Agency Misapplies the Funds (Filing Accepted, Payment Mismatched)
  
  In some cases, the filing itself is accepted, but the agency applies the payment to the wrong account, tax type, or tax period. This can happen if outdated or incorrect account details were on file when the agency attempted to process the payment. The payment is technically “sent,” but because it was applied incorrectly, the agency will still show a balance due and issue a notice.

Refunded or failed tax payments may continue to appear as Pending in 7shifts until the underlying issue is resolved. Refund confirmations and agency balances should always be verified directly in the tax agency portal.

What This Means for You: Regardless of the scenario, the tax agency considers the payment still owed. To avoid penalties and interest, we recommend paying the agency directly if the due date is near. If funds were misapplied or later corrected, the agency will apply a credit, and you can request a refund from them afterward.

If you've confirmed your setup but the filing failed:

1. Contact 7shifts support. We'll need to review it with our partner, Check Technologies. Please note, investigations involving our payroll partner can take up to 20 days. If your matter is time-sensitive, reach out to the tax agency directly.
2. Upload a full copy of the tax notice (or a full screenshot of your agency portal) to your support ticket.
3. Describe what the notice is about (if known) and let us know if you've already made updates in 7shifts.

7shifts cannot automatically refile failed payments. Depending on the issue, you may request a refile (fees may apply). Employers are responsible for maintaining accurate agency authorizations and settings.