The Failure to Deposit Penalty is applied to employers who fail to deposit employment taxes:

• On time
• In the right amount
• In the right way

This includes Federal Income Tax, Social Security and Medicare Tax and Federal Unemployment Tax. Employers are required to make monthly or semi-weekly federal employment tax deposits with the IRS.

Your penalty is a percentage of the taxes you failed to deposit timely, correctly, or properly.

How you know you owe the penalty

If you are subject to the Failure to Deposit Penalty, we send you a notice or letter. See Understanding your IRS notice or letter for more information.

How we calculate the penalty

To figure the Failure to Deposit Penalty, we determine the number of calendar days your deposit is late from the due date.

The sums of the penalties don’t total. To illustrate, if your deposit is more than 15 days late we do not charge the 10% penalty in addition to the 2% and 5% lateness penalties already imposed. In this case, again, you would simply have a total penalty percentage of 10%.

If the request is made more than 10 calendar days from the date of your initial notice or letter (i.e. CP220 Notice) or if you receive a notice or letter requesting immediate payment (i.e. CP504J Notice) 15% of the outstanding balance in interest will be charged.

The IRS applies interest on penalties.

The date that we start to charge interest on varies based on the type of penalty. Interest accrues on the balance that you owe until your balance is paid in full. See for details the interest on penalties we charge.

Pay a penalty

Send us payment or pay your taxes in full to avoid additional future penalties and interest from accruing.

Remove or reduce a penalty

If you acted in good faith and have a reasonable cause for why you were unable to meet your tax obligation, we might be able to eliminate or lessen certain penalties. Legally we cannot delete or reduce interest unless the penalty is deleted or reduced.

Remove a penalty without a bank account

If you already filed your taxes and you don’t have a bank account, you may submit a request asking us to remove a penalty. To submit a request:

• Obtain a signed and dated letter from the bank which rejected your account. The statement must be dated within the last 2 years.
• You can write a letter requesting the removal of the penalty. In your letter describe what you attempted to do to obtain a bank account.
• Include a copy of the notice we sent you. You should submit it to the address indicated in your notice.

Dispute a penalty

You can challenge the penalty if you feel that you owe too much.

Simply call the toll-free number listed in the upper right corner of your notice or letter or send us a letter requesting that we reconsider the penalty. Sign, and date if necessary, that letter and any supporting document and send them to the address on your notice or letter.

During your call or in your letter, have this information:

• Any notice or letter sent to you by us
• The punishment you wish us to reconsider
• An explanation for each penalty of why you feel we should remove it.
• Do not have a notice or letter? Call for assistance.

Avoid a penalty

Find details on schedules, due dates and forms to file for reporting and depositing employment tax.

Avoid a penalty without a bank account

If you have not yet filed your tax return and do not have a bank account you may send us a request asking us not to apply a penalty to you. To make a request:

• Obtain a signed, dated statement from the bank that refused your account. The statement should be dated no more than two years ago.
• If individuals file using Forms 941, 943, 944, or 945, they should write “Unbanked” on the top of the form when submitting it for processing.
• Send us a letter requesting that we don’t apply the penalty. In your letters write an account of what you attempted to do to obtain a bank account.
• When you file your employment taxes, include the IRS letter and your signed statement.
• Send your request through the mail to the address indicated in the instructions on the form.

Apply for a payment plan

If you cannot pay your taxes in full, pay what you are able to pay and apply for a payment plan. Setting up a payment plan can also minimize future penalties.

Get help

To receive assistance regarding a penalty, contact the number listed in your notice or letter. Use phone assistance if you did not receive a letter or notice.