A late tax deposit: penalties and how StartEase helps

A deposit made after its due date carries a penalty that grows with every day.

What happens if a payroll tax deposit is late?

The IRS charges a penalty on a deposit made after its due date, and the penalty grows the longer the deposit is late (26 U.S.C. § 6656). A person responsible for paying over withheld tax can also be personally liable (26 U.S.C. § 6672).

The problem

The IRS charges a penalty on payroll tax deposits made after the due date, and the penalty grows the longer the deposit is late. Payroll taxes that were withheld from employees' pay and not paid over can also make the people responsible personally liable.

The notice comes to the employer, whoever processed the payroll.

How StartEase manages it

• The compliance calendar lists every deposit due date for your deposit schedule.
• In Company details the company chooses who makes the federal tax deposits: StartEase, as the company's authorized agent (IRS Form 8655, Managed payroll only), or the company from its own EFTPS account. StartEase never asks for or keeps the EFTPS PIN or password.
• Each deposit is recorded with its date and confirmation number, so the calendar shows what is paid and what is still open.
• StartEase does not pay your employees or contractors. That payment always comes from the company's own bank.

If you receive a penalty notice, send it to your payroll team straight away. Do not ignore the reply date on it.