10 March 2020

IRS Payroll Tax Deposit Penalties

Today we’re going to discuss IRS payroll tax deposit penalties.

Tax Deposit Penalties may apply if you don’t make required deposits on time or if you make deposits for less than the required amount. The penalties don’t apply if any failure to make a proper and timely deposit was due to reasonable cause and not because of willful neglect. So, if you receive a penalty notice, that would be the time to provide an explanation of why you believe reasonable cause exists.

The IRS determines the penalty amount based on how late you make the payment.

There are FOUR levels.

2% Penalty for Deposits made 1 to 5 days late.
5% Penalty for Deposits made 6 to 15 days late.
10% Penalty for Deposits made 16 days late, until 10 days after the date of the first notice the IRS sent asking for the tax due.
15% Penalty for Amounts still unpaid more than 10 days after the date of the first notice the IRS sent asking for the tax due.

The IRS also applies a 10% penalty on amounts that should have been deposited, but instead were paid directly to the IRS, or paid with your tax return.

NOTE: Late deposit penalty amounts are determined using calendar days, starting from the due date of the liability. I can HELP with IRS Payroll tax penalties.