You missed a payroll tax deposit. Do this next
Make the deposit as soon as you can, because the IRS penalty climbs from 2% to 15% the longer it stays unpaid. File your returns on time even if you can't pay in full. Payroll taxes are serious, because owners can be held personally liable for unpaid withheld amounts.
Updated November 2026 · By Pankil Kumar, Managing Partner
Quick facts
- Penalty. From 2% for a few days late, up to 15%
- Do first. Deposit what you owe as soon as possible
- Risk. Owners can be personally liable for withheld taxes
How much is the penalty?
The failure-to-deposit penalty depends on how late you are.
| Days late | Penalty |
|---|---|
| 1 to 5 days | 2% |
| 6 to 15 days | 5% |
| More than 15 days | 10% |
| After an IRS notice demanding payment | 15% |
Interest also runs on unpaid amounts. Late filing of the return is a separate penalty, so file on time even if the money isn't there.
What should you do right now?
- Make the deposit through EFTPS or your payroll provider, today if you can.
- Work out which pay dates are affected and whether any other deposits were missed.
- File Form 941 on time, reporting the correct numbers.
- If you have a clean compliance history, ask about penalty relief when the notice arrives.
Why are payroll taxes treated differently?
Money you withhold from paychecks isn't yours. It's held in trust for the government. If it isn't paid, the IRS can charge the Trust Fund Recovery Penalty to the people responsible, which can include owners and anyone with authority over payments. It equals the withheld income tax and employee share of Social Security and Medicare, and it doesn't go away when the business closes.
Using payroll tax money to cover rent for one tight month is one of the most expensive loans in business.
Can you get the penalty removed?
Sometimes. The IRS may remove a penalty for reasonable cause or under first-time relief if you've got a clean history. We can read the notice, explain it and prepare the response for you to sign. See what to do when you get an IRS letter.
How do you stop it happening again?
Use a provider that debits taxes with each payroll, so the money never sits in your account. Review your deposit schedule each year. Monthly filers can become semiweekly depositors as payroll grows. And check that your provider is actually depositing. The responsibility stays with you, even when you outsource.
Sources
- IRS: Failure to deposit penalty
- IRS: Trust Fund Recovery Penalty
- IRS Publication 15: Employer's tax guide
General information, not tax advice for your situation.
Can the IRS come after me personally for payroll taxes?
Yes. The Trust Fund Recovery Penalty can apply to anyone responsible for paying the tax who willfully failed to do so.
What if I can't pay all my payroll taxes?
File on time, pay what you can and contact the IRS about payment options. Don't ignore the notices.
Does the penalty apply if my payroll company made the mistake?
The IRS will generally look to you first. Check your service agreement, since some providers cover penalties they cause.
Tell us what's messy. We'll tell you what it takes.
Tell us what you need and get a fixed price before any work starts. No pressure and no contract.