Form 941 Penalties for not filing & not paying the Taxes

Late filing, late payment, incorrect information, and missing information

Penalties Overview

What penalties could my company face?

Failing to File: If you fail to file your 94x Series Form by the deadline your business will incur a penalty of 5% of the total tax amount due. You will continue to be charged an additional 5% each month the return is not submitted to the IRS up to 5 months. If in addition to failing to file you did not pay your owed tax bill you will initially be charged .5% of the unpaid tax amount, and this fee will increase each month the payment remains unpaid. The penalty will increase to 1% ten days following the IRS notice of intent to levy.

941 PR Penalties

Failing to Pay: If you filed your 941 form but neglected to pay taxes owed or did not pay the amount in full: Payments submitted 1 to 5 days following the deadline, will result in a 2% penalty of the unpaid tax. Deposits paid 6 to 15 days after the deadline will be charged 5% of the outstanding amount.

Once you exceed 16 days, you and your business will be charged a penalty of 10% until ten days following receiving your first notice from the IRS. After this point, you will be penalized 15% and must pay immediately, or the IRS will have legal right to seize the unpaid tax amount plus penalties. 10 days after receiving IRS Notice

Small Business Penalty Rates

Failure to File Form 941
No. of Days Following DeadlinePenalty RatePenalty on $3,000(Base on Unpaid Tax Owned)
One to five days2%$60
Six to fifteen days5%$150
Sixteen or more days10%$300
10 Days After Receiving Notice from IRS15%$450

Note: Late deposit penalty amounts are determined by the date filed following the deadline.

Trust Fund Recovery Penalty

If you filed IRS Form 944 last year but will be filing Form 941 for the current year, there will be no penalties
if the taxes are paid in full by March 15th, 2018.

Employers must be aware of the “trust fund penalty” which can be imposed on individuals responsible for withholding payroll taxes. The individual is at risk of being held accountable for 100% of the unpaid taxes plus penalties.

How to Avoid IRS Penalties and Interest

Avoid penalties and interest with the following actions:

  • Pay the full amount of taxes you owe when they are due.
  • File your fully completed Form 941 on time.
  • Accurately report your tax liability.
  • Submit valid checks for tax payments.
  • Provide accurate Forms W-2 to your employees.
  • Accurately file Form W-3 and Copy A of Forms W-2 with the SSA on time.

IRS penalties are avoidable when you plan ahead and know where to file your Form 941 efficiently. TaxBandits, is an IRS-authorized comprehensive solution for generation and e-filing your small business tax forms.

In order to avoid penalties be sure to deposit or pay your owed IRS taxes by the deadline along with your Employer's Quarterly Tax Return Form. Also, you will need to report your tax liability accurately.

Form 94x Series Resources

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