How Payroll Tax Penalties are Calculated

You must pay payroll tax penalties if you fail to pay an appropriate tax on each paycheck you write. The Internal Revenue Service operates on a pay-as-you-go system; this means businesses, just like individuals, must pay regular taxes throughout the year. If you miss a tax payment, you will be penalized in a unique manner.

Payroll Tax Schedule

Your payroll tax schedule is the same as your paycheck schedule. If you pay employees weekly, you owe taxes weekly. If you pay bi-weekly, you owe taxes bi-weekly. This is important to remember when it comes to missed payments. If you miss one, the payment you make on your next due date is actually applied to the missed payment. This means you will again be late this month on your payment. Penalties are calculated on every single missed payment.

Payroll Tax Penalty

To avoid paying a penalty on every single tax payment this year, correct the problem by applying a payment to the very first payroll tax payment that you missed. Pay a penalty for being delayed on this tax payment only. The IRS will not do this by default. Instead, the payment will be applied to the most recent tax cycle. You must clarify you wish to make up for your first missed payment.