Federal Tax Deposit Penalties – Form 940, Form 941, or Form 944

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Failure to Deposit Penalty Percentage Rates:

 

At a Glance Failure to Deposit Penalty Rates for Unpaid Tax:

 

  • 1-5 days late: 2%
  • 6-15 days late: 5%
  • 16 or more days late: 10%
  • More than 10 days after the first IRS bill: 15%

 

In addition to the above deposit penalties, you will also be subject to penalties if you file your Forms 940, 941, or 944 late, or don’t pay the amount due on the return:

 

Other Penalties:

 

Failure To File Penalty:

  • 5% per month of unpaid tax on the due date, reduced by the amount of failure to pay penalty for the same month – Maximum 25%

Failure To Pay Penalty:

  • 1/2 % per month of unpaid tax, then 1% per month 25% after Notice of Intent to Levy – Maximum 25%

 

Reminder: In addition to penalties, you also must pay interest. Interest rates are set quarterly. For example, the interest rate has recently varied between 3–6%. You will continue to pay interest until you pay all the money you owe the government.

 

A 10% avoidance penalty is assessed if you do not deposit as required. The penalty is charged if you send a payment to the IRS when you are required to

deposit. The avoidance penalty is assessed at the same time as the failure to deposit penalty, not in addition to the failure to deposit penalty.

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