This is the fourth post in the Employment Tax Law series. This series is dedicated to presenting individuals, sole proprietorships, and small to large businesses with a basic understanding of employment taxes, including the risks and responsibilities associated with those taxes.
Deposit penalties occur when the taxpayer fails to make timely deposits, the timely deposits are made for less than what is owed, or the taxpayer fails to make the deposits in the proper manner (e.g. fails to use the EFTPS). For the amounts not properly or timely deposited, the applicable penalty rates are as follows:
g. The IRS may assess an “averaged” failure to deposit penalty in cases where the taxpayer failed to report their tax liabilities. For a monthly depositor, this is the information on Line 17 of Form 941. For a semi-weekly depositor, this requires a Schedule B (Form 941).