Note:

Beginning January 2010, employers who file Form 941 will not have to make deposits during a quarter if their total tax liability for either the current quarter or the prior quarter is less than $2,500 and they did not incur a $100,000 next-day deposit obligation during the current quarter and they fully pay the amount due with a timely filed return for the current quarter.

A taxpayer’s status, for Forms 941, 943, 944, 945, and CT-1 filers, will be decided by a review of a preceding 12-month period. See IRM 20.1.4.8.2 Lookback Periods for Employment Tax (Forms 941, 943, 944, 945, and CT-1.) This is the look back period. If the sum of taxes reported during the look back period is $50,000 or less, the taxpayer will be considered a monthly depositor. If the sum of the taxes reported during the look back period is more than $50,000.00, the taxpayer will be considered a semi-weekly depositor. Taxpayers can make their tax deposits, through the Electronic Federal Tax Payment System (EFTPS). Taxpayers required to use EFTPS may be subject to a penalty if they use a FTD coupon instead of EFTPS. (FTD coupons were eliminated after December 31, 2010). See IRM 20.1.4.7.1 Time Sensitive Four Tier Penalty System, for additional information.

The FTD penalty has a four-tier rate structure of 2%, 5%, 10%, and 15%, charged as follows:

2%- for deposits 1 to 5 days late.

5%- for deposits made 6 to 15 days late.

10%- for all payments made directly to IRS.

10%- for amounts subject to electronic deposit requirements but not depositing using EFTPS or for depositing in an incorrect method (when required to use EFTPS).

10%- for deposits made more than 15 days late, but on or before the 23C Date plus 10 days.

15% - for all undeposited taxes still unpaid after the 10th day following the first Balance Due Notice or the day on which notice and demand for immediate payment is given.

Deposits are generally applied to the most recently ended tax deposit period within a specific tax return period to which the deposit relates, however per IRC 6656(e) and Revenue Procedure 2001-58 taxpayers can designate the period(s) orally or in writing. (See IRM 21.5.2.4.9, Penalty Overview, for more information). For penalty computation purposes, the TC 716 availability date is the date on which the overpayment actually occurred. If more than one deposit makes up the overpayment, the date of the earliest deposit is the TC 716 availability date (see IRM 20.1.4.7.4, Application of Payments). The failure to deposit penalty (TC 186) will automatically recompute whenever timely credits are transferred into or out of a module that is not restricted (TC 180/181) (see IRM 20.1.4.22 , Master File Assessments and Recomputations). An adjustment notice will generate when an automatic recomputation of the FTD penalty occurs.