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Penalties for not filing Form 940 / 941 & not paying the Payroll Taxes

If you own and operate a business with employees, you will need to know about when to deposit your payroll and withholding taxes depending on tax liability, and when to file the payroll tax 940, 941, 943, 944, and 945 forms. If you are late depositing or filing your return, the IRS will impose penalties.

The following are the topics that are more specific about Form 940/941 penalty.

Penalties for failing to file Payroll Forms 940 and 941

If you fail to File your Form 940 or Form 941 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.
  • In addition to failing to file, if 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.

Avoid Penalties. File your 940 and 941 Forms now with the IRS.

Penalties for failing to pay payroll taxes reportable on 940 and 941 Forms

In case, if you have failed to pay your payroll taxes, you will probably receive a notice from the IRS about the penalty.

The IRS will impose the penalty based on How much tax you owe and when you made the payment.

For example: Consider, you are responsible for paying $3000 to the IRS for the quarter and you have deposited your taxes after 20 days from the deadline. Now IRS will impose a penalty and send you a notice regarding the late payment.
In this case, you will be liable for paying a penalty of $300 which is a 10% penalty rate of your taxes.

Penalty Calculator: Applicable Penalty Rates for not paying taxes

No. of Days the payment delayed Penalty Rate
One to five days 2%
Six to fifteen days 5%
Sixteen or more days 10%
10 Days After Receiving Notice from IRS 15%

Avoid Penalties. File your 940 and 941 Forms now with the IRS.

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, 2019.

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:

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, make sure that you have report your tax liability without any errors.

IRS penalties are avoidable when you plan ahead of your filing deadline. File your Form 940 and Form 941 securely and accurately using TaxBandits, an IRS-authorized e-file provider. File your 940 and 941 Forms for just $4.95/form. View Detailed Pricing.

If your tax deposits were made on time for the Tax Year 2019, you have until February 10, 2020 to file Form 940, Form 941, Form 944, and Form 945.

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