PENALTIES
Failure to Deposit - IRC section 6656: This is a 10 percent penalty
applicable only to the employer paid portion of the tax. This means the
employer's share of the FICA and all of the FUTA. Delinquency - IRC section 6651: If the employment tax returns
were filed late, delinquency penalties are applicable as with any other tax. A
transcript should be consulted. Negligence - IRC sections 6653(a) through 8909, IRC section 6662 for 8912
and thereafter: Since the Tax Reform Act of 1986,
negligence has been applicable to employment taxes. Prior
to that Act there was no provision for the
application of the penalty. Fraud - IRC section 6663 for returns due after December 31, 1989, IRC section
6653(b) for returns due prior to that date: Though
applicable to employment tax returns, the same burden
of proof as to intent exists as with an income tax
case. BACKUP WITHHOLDING Backup withholding
should be considered where no Forms 1099 are issued or
identifying numbers supplied and the individual is not an employee. The
issue is fully discussed in another section, but merits mention here because
backup withholding is treated as an employment tax and reported on the Form
941. It is subject to the same statutes as the employment taxes even if no
Forms 1099 were filed. STATUTE AND CLOSING PROCEDURES The normal statute date
for timely filed Forms 941 for all quarters of a calendar year is April 15 of
the fourth succeeding year, regardless of the due date of the quarterly return.
For example: the normal statute date for all 1990 quarterly Forms 941 is April
15, 1994. If it is later, the statute expiration date of delinquent returns is
3 years from the filing date. The statute date for
Form 940, FUTA, is 3 years from the due date or filing date, whichever is later.
Since the due date for filing the Form 940 is January 31 of the year following
the calendar year, the expiration date for a timely filed 1990 return is
January 1, 1994. 9-12 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Glossary |