The Internal Revenue Service (IRS) is very strict about payroll tax deposits. All business should strive to submit payroll tax deposits on time. Payroll tax penalties and fines apply if businesses fail to make timely payroll tax deposits. Business owners or other employees who are in charge of collection, accounting, and payment of payroll taxes may also be penalized by the IRS if they are found to have intentionally failed to deposit payroll taxes. Payroll tax penalties will apply not only if you fail to make payroll tax deposits on time, but also if you fail to make deposits for less than the required amount. In some cases, the IRS will waive payroll tax penalties if the failure to make payroll tax deposits was unintentional and there was a reasonable cause for the business to miss making the deposit.
Payroll Tax Penalties
The amount of the penalty for failure to deposit payroll taxes on time or in full varies depending on how late the payment is and the amount that is past due. For deposits made 1-5 days late, the penalty is 2% of the past due amount. For deposits made 6-15 days late, the payroll tax penalty is 5% of the past due amount. For deposits made 16 or more days late, the penalty amount is 10% of the past due amount. Payroll tax penalties increase to 15% of the past due amount if the IRS has sent a notice requesting the tax due and it remains unpaid for more than 10 days after that notice was received by the business. The amount of the late deposit penalty is calculated using calendar days starting with the due date of the payroll tax deposit.
Certain businesses are required to make payroll tax deposits through the Electronic Federal Tax Payment System (EFTPS) and if they fail to use EFTPS, they will also incur penalties. Beginning January 1, 2011, all businesses will be required to make deposits electronically through EFTPS.
*Reference: https://law.freeadvice.com/tax_law/tax_enforcement/payroll_tax_payments.htm