What are the penalty rates for Form 941?

The IRS imposes penalties for three main reasons:

Penalty for late filing

Failing to file Form 941 results in a 5% penalty on the total tax due. If the return is late for more than one month, an additional 5% penalty applies for each month, up to five months.

Penalty for late payments

If you fail to make payments for the taxes owed to the IRS. You will be penalized with an additional penalty for late payment. 

Failure to deposit a penalty

• If the deposit is delayed for more than five calendar days, the penalty will be 2% of the unpaid tax.
• If the deposit is delayed by six to fifteen calendar days, the penalty will increase to 5% of unpaid tax.
• If the deposit is delayed more than fifteen calendar days, the penalty will increase to 10% of unpaid tax.

To avoid such penalties, be sure to follow this checklist:

• Pay the full tax amounts when they are due.
• Don’t wait until the last minute—file your Form 941 on time.
• Report your tax liability accurately.
• Ensure that all checks are valid.
• Provide your employees with the correct W-2 forms.
• Double-check that all entries are correct.
• Always verify your EIN before filing.