What Is an Employer Penalty on Form 941?
The Employer's Quarterly Federal Tax Return, Form 941, is used to report wages paid to employees, reported tips, federal income tax withheld, social security and Medicare taxes withheld, the employer's social security and Medicare taxes and advance earned income credit payments. Failing to pay on time or failing to make a deposit properly can result in stiff penalties.
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Form 941
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Form 941 is a quarterly tax return, due the last day of the month after the end of a quarter. Additionally, if an employer accrues more than $2,500 in taxes during one quarter, he is expected to deposit the taxes in regular intervals. The interval may be semiweekly or monthly depending on the circumstances. Taxes can be deposited via credit or debit payments, Bank deposits, or the Electronic Federal Tax Payment System (EFTPS).
Failure to File
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Failure to file a Form 941 when required will result in a monthly fine of 5 percent of the unpaid taxes owed, up to 25 percent. Additionally, failing to pay any required tax when filing results in a 0.5 percent penalty per month, also up to 25 percent.
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Failing to Deposit
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Failing to deposit on time, depositing the full amount or not depositing via EFTPS, can result in severe penalties depending on the length of delay. Fines are 2 percent for late deposits of one to five days, 5 percent for six to 15 days, 10 percent for delays of more than 16 days and failure to deposit the funds through proper channels. A 15 percent fine is levied for failing to pay the tax more than 10 days after receiving an IRS notice.
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