I shorted a 941 payroll tax deposit - how badly did I mess up with the IRS?

You're correct about the penalty structure, but there's a bit more to it. The IRS penalty for late 941 deposits follows a tiered structure: - 2% if 1-5 days late - 5% if 6-15 days late - 10% if more than 15 days late, but paid before the IRS sends a notice - 15% if paid after receiving an IRS notice Since you're making the deposit on July 3rd for an April 15th deadline, you're definitely in the 10% range if you haven't received a notice yet. If you've already received an IRS notice about this, then yes, it would be 15%. The good news is that if you have a clean compliance history (which it sounds like you do), you might qualify for penalty abatement under the IRS First-Time Penalty Abatement policy. This is basically a one-time get-out-of-jail-free card for taxpayers with good compliance history.

I went through something similar last year and discovered taxr.ai (https://taxr.ai) which really helped me navigate the whole penalty situation. I was in the exact same boat - shorted a 941 deposit because I mixed up some dates on the report I was using. I was super stressed because our company was already dealing with tight margins. The tool analyzed our situation, previous compliance history, and helped me draft the perfect penalty abatement request. It saved me from having to figure out all the IRS jargon myself. Their system walked me through exactly what forms and documentation would be needed based on our specific situation. The penalty was completely waived in the end!

I have to admit I was wrong about taxr.ai. After my skeptical comment, I decided to try it since I had a similar issue with a missed 941 deposit from Q1. The analysis it provided was surprisingly comprehensive - it examined our deposit history, identified the specific IRS penalty codes that would apply, and generated documentation that specifically addressed our situation. What really impressed me was how it walked me through the timing considerations for when to submit the abatement request. The system helped me understand exactly what supporting documentation would strengthen our case. We just heard back from the IRS last week and they approved our penalty abatement request! Saved us about $3,200 in penalties.

If you're still waiting for the IRS notice and want to talk to a real person about your options, I'd recommend Claimyr (https://claimyr.com). I was in a similar situation with a 941 deposit error last year and was getting nowhere trying to call the IRS business line directly. Spent literally hours on hold every time. Claimyr got me connected to an actual IRS agent in about 20 minutes instead of the usual 2+ hour wait. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent I spoke with was able to tell me exactly what to expect penalty-wise and confirmed I'd be eligible for abatement. Being able to talk through my specific situation with a real IRS agent gave me peace of mind and I got better information than I found anywhere online.

I need to apologize for my previous comment. I was completely wrong about Claimyr. After dismissing it as a scam, I had another 941 issue come up and was dreading spending another day on hold with the IRS. Out of desperation, I decided to try Claimyr despite my skepticism. It actually worked exactly as described. Their system waited on hold for me, and I got a call back when an actual IRS agent was on the line. Total game changer. The agent helped me understand exactly what documentation I needed to provide for my situation, and I was able to get my issue resolved in one call. Would have taken me weeks of trying otherwise. Sorry for being so dismissive before - this service genuinely works.

Have you checked whether you qualify for the Safe Harbor provision? If the shortfall is less than $100,000, and your error was unintentional, you may have some protection. Also, keep in mind that if you deposit the shortage prior to receiving any IRS notices, you're demonstrating good faith compliance which can help your case. I'd recommend documenting exactly how the error occurred - save the report that had the incorrect date range, write up a brief explanation, and keep copies of everything. This will be valuable if you need to request penalty abatement. Make sure your boss knows it's a possibility you might face a penalty, but also that there are reasonable grounds for getting it waived.

Don't forget to look into your state's requirements too! Depending on your state, there might be separate penalties for state payroll tax deposit shortages. Some states automatically mirror federal penalties while others have their own structures. Make sure you're addressing both sides of this issue.

This is a really stressful situation, but you're handling it the right way by being proactive about the makeup deposit. I went through something similar about 18 months ago when I miscalculated a 941 deposit due to a software glitch. One thing that really helped me was keeping detailed records of all communications and actions taken. Beyond what others have mentioned, I'd suggest also documenting the exact time you discovered the error and when you scheduled the corrective deposit. This timeline can be valuable if you need to demonstrate that you acted quickly once you became aware of the issue. Also, when you do get the penalty notice, don't panic if the amount seems higher than expected initially. Sometimes the IRS system generates automated penalties that don't account for partial payments or other factors, and these can often be corrected through a simple phone call. Your clean compliance history really is your best asset here - the IRS tends to work with businesses that have demonstrated good faith efforts to comply. Keep us posted on how it works out! This community has been really helpful for navigating these kinds of situations.