SECTION 5. EXAMPLES — Internal Revenue Bulletin 1999-2

.01 Example 1. For the first calendar quarter of 1999, A, a semi-weekly employment tax depositor within the meaning of § 31.6302–1 of the Employment Taxes and Collection of Income Tax at Source Regulations, accumulates the following employment tax deposit liabilities for its bi-weekly paydates, and makes the following deposits:

Deposit due date	Required deposit	Actual deposit	Amount applied by IRS to previous underdeposits under Rev. Proc. 90–58	Amount applied to required deposit	Underdeposit
1-6-99	$7,000	$7,000	$0	$7,000	$0
1-21-99	$5,000	$4,000	$0	$4,000	$1,000
2-3-99	$5,000	$5,000	$1,000	$4,000	$1,000
2-18-99	$8,000	$8,000	$1,000	$7,000	$1,000
3-3-99	$6,000	$6,000	$1,000	$5,000	$1,000
3-17-99	$5,000	$4,000	$1,000	$3,000	$2,000
3-31-99	$10,000	$10,000	$2,000	$8,000	$2,000

January 11, 1999 12 1999–2 I.R.B.

During April 1999, A completes its Form 941 for the first quarter and discovers the January 21, 1999, and March 17, 1999, underdeposits. On April 30, 1999,

the due date for the Form 941, A files the Form 941 and deposits $2,000.

The Service mails a notice to A dated July 21, 1999, advising that A is subject to

the § 6656 failure-to-deposit penalty as follows:

Date of underdeposit	Amount of underdeposit	Days late	Applicable penalty rate	Penalty amount
1-21-99	$1,000	13	5%	$50
2-3-99	$1,000	15	5%	$50
2-18-99	$1,000	13	5%	$50
3-3-99	$1,000	14	5%	$50
3-17-99	$2,000	14	5%	$100
3-31-99	$2,000	30	10%	$200
			TOTAL	$500

ary 3, 1999, February 18, 1999, March 3, 1999, and March 31, 1999. However, A continues to be liable for the January 21, 1999, and March 17, 1999, underdeposits. The Service will reduce the total penalty amount to which A is subject to $200 as follows:

Under §6656(e), A has until October 18, 1999, to designate its deposits for the first quarter of 1999 by calling the tollfree number shown on the penalty notice. On August 19, 1999, A calls the toll-free number shown on the penalty notice and designates its February 3, 1999, February

18, 1999, March 3, 1999, March 17, 1999, and March 31, 1999, deposits to each apply entirely to the federal tax deposit due on each of those respective days. By so designating its deposits, A is no longer subject to the failure-to-deposit penalty for its federal tax deposits due on Febru

Date of underdeposit	Amount of underdeposit	Days late	Applicable penalty rate	Penalty amount
1-21-99	$1,000	99	10%	$100
3-17-99	$1,000	44	10%	$100
			TOTAL	$200

.02 Example 2. For the first calendar quarter of 1999, B, a semi-weekly employment tax depositor within the mean

ing of § 31.6302–1 of the regulations, accumulates $5,000 of employment tax liabilities for each of its bi-weekly pay

dates, and makes $5,000 deposits as follows:

Deposit liability due date	Date of deposit	Days late	Applicable penalty rate	Penalty amount
1-6-99	1-6-99	0	0	$0
1-21-99	1-22-99	1	2%	$100
2-3-99	2-4-99	1	2%	$100
2-18-99	2-19-99	1	2%	$100
3-3-99	3-4-99	1	2%	$100
3-17-99	3-18-99	1	2%	$100
3-31-99	4-1-99	1	2%	$100
			TOTAL	$600

1999–2 I.R.B 13 January 11, 1999

The Service mails a notice to B dated July 28, 1999, advising that B is subject to a $600 failure-to-deposit penalty under § 6656. Under §6656(e), B has until October 25, 1999, to designate the deposit li

ability due dates to which its deposits for the first quarter of 1999 will be applied by calling the toll-free number shown on the penalty notice. On September 30, 1999, B calls the toll-free number shown on the

penalty notice and designates that its deposits be applied to its deposit liability due dates as follows:

Date of deposit	Application of deposit		Days late	Applicable penalty rate	Penalty amount
Date of deposit	Deposit liability due date	Taxpayer designation	Taxpayer designation	Taxpayer designation	Taxpayer designation
1-6-99	1-6-99	1-6-99	0	0%	$0
1-22-99	1-21-99	2-3-99	0	0%	$0
2-4-99	2-3-99	2-18-99	0	0%	$0
2-19-99	2-18-99	3-3-99	0	0%	$0
3-4-99	3-3-99	3-17-99	0	0%	$0
3-18-99	3-17-99	3-31-99	0	0%	$0
4-1-99	3-31-99	1-21-99	70	10%	$500
				TOTAL	$500

By so designating its deposits, the Service will reduce the total penalty amount to which B is subject to $500.