What About Penalties and Interest?

Avoiding Penalties and Interest You can avoid paying penalties and interest if you do all of the following.

• Deposit or pay your taxes when they are due.

• File your fully completed Form 941 on time.

• Report your tax liability accurately.

• Submit valid checks for tax payments.

• Furnish accurate Forms W-2 to employees.

• File Form W-3 and Copy A of Forms W-2 with the SSA on time and accurately.

Penalties and interest are charged on taxes paid late and returns filed late at a rate set by law. See sections 11 and 12 of Pub. 15 for details.

Use Form 843 to request abatement of assessed penalties or interest. Don’t request abatement of assessed penalties or interest on Form 941 or 941-X.

If you receive a notice about a penalty after you file this return, reply to the notice with an explanation and we will determine if you meet reasonable-cause criteria. Don’t attach an explanation when you file your return.

Caution: If federal income, social security, and Medicare taxes that must be withheld (that is, trust fund taxes) aren’t withheld or aren’t deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. The penalty is 100% of the unpaid trust fund tax. If these unpaid taxes can’t be immediately collected from the employer or business, the trust fund recovery penalty may be imposed on all persons who are determined by the IRS to be responsible for collecting, accounting for, or paying over these taxes, and who acted willfully in not doing so. For more information, see section 11 of Pub. 15. The trust fund recovery penalty won’t apply to any amount of trust fund taxes an employer holds back in anticipation of any credits to which they’re entitled.