Handling Re-Debited Taxes After a Returned Tax Payment

Overview

This article explains what happens when a prefunded tax payment is returned, why the system may automatically attempt to debit the taxes again, and the two options available for handling the re-debited funds: applying them toward future payrolls or requesting a refund. Use this guidance to understand the automatic re-debit behavior and choose the option that best fits the client's situation.

 

Why Taxes May Be Re-Debited After a Return

When a prefunded tax payment receives a return code, the system will automatically attempt to debit the taxes again if there is sufficient time before the due date (at least 4 business days), unless the payment has been marked as recorded in the system. This automatic re-debit is designed to ensure the tax liability is satisfied by the due date and prevents the client from incurring late-payment penalties.

 

Options for Handling Re-Debited Taxes

Once taxes have been re-debited, you have two options:

  • Apply the funds toward future payrolls.

  • Request a refund of the taxes (a fee applies).

     

How to Apply Re-Debited Taxes Toward Future Payrolls

To apply the funds toward upcoming payroll tax liabilities, follow these steps after approving the next payroll:

  1. Approve the payroll as you normally would.

  2. Navigate to the Pending Payments screen.

  3. In the box that appears for the applicable tax payment, select Pay Different Amount.

  4. Enter the difference or the amount to be debited.

  5. Save the change so the new amount is reflected for the upcoming payment.

     

How to Request a Refund of Re-Debited Taxes

A refund request is submitted through an E-Support request. A processing fee applies (currently $145.00) for refund requests.

  1. Select the Support icon on the Global Toolbar in the upper right of the interface to open the Support Request screen.

  2. In the Description field, include the notation Refund of Taxes.

  3. Enter the following required information in the request:

    • Firm Code

    • Client Code

    • Client Name

    • Amount to be refunded

    • Reason for the request

    • Acceptance of the $145.00 Fee

  4. Select Submit to submit the request.

     

Tips for a Smooth Refund Request

  • Make sure all required fields (Firm Code, Client Code, Client Name, Amount, Reason, and Fee Acceptance) are included to avoid processing delays.

  • Confirm the refund amount matches the re-debited amount on the account.

  • If you would prefer to avoid the fee, consider applying the funds toward future payrolls instead.

     

Key Takeaways

  • A returned prefunded tax payment will trigger an automatic re-debit attempt if there are at least 4 business days before the due date, unless the payment is marked as recorded.

  • Re-debited taxes can be applied toward future payrolls through the Pending Payments screen using the Pay Different Amount option.

  • A refund of re-debited taxes can be requested through an E-Support request, subject to a $145.00 processing fee.

  • All required information (Firm Code, Client Code, Client Name, Amount, Reason, and Fee Acceptance) must be included in the refund request.