Internal Revenue Code:Sec. 6656. Failure to make deposit of taxes
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 68 - ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND
ASSESSABLE PENALTIES
Subchapter A - Additions to the Tax and Additional Amounts
PART I - GENERAL PROVISIONS
Statute
Sec. 6656. Failure to make deposit of taxes
(a) Underpayment of deposits
In the case of any failure by any person to deposit (as required
by this title or by regulations of the Secretary under this title)
on the date prescribed therefor any amount of tax imposed by this
title in such government depository as is authorized under section
6302(c) to receive such deposit, unless it is shown that such
failure is due to reasonable cause and not due to willful neglect,
there shall be imposed upon such person a penalty equal to the
applicable percentage of the amount of the underpayment.
(b) Definitions
For purposes of subsection (a) -
(1) Applicable percentage
(A) In general
Except as provided in subparagraph (B), the term ''applicable
percentage'' means -
(i) 2 percent if the failure is for not more than 5 days,
(ii) 5 percent if the failure is for more than 5 days but
not more than 15 days, and
(iii) 10 percent if the failure is for more than 15 days.
(B) Special rule
In any case where the tax is not deposited on or before the
earlier of -
(i) the day 10 days after the date of the first delinquency
notice to the taxpayer under section 6303, or
(ii) the day on which notice and demand for immediate
payment is given under section 6861 or 6862 or the last
sentence of section 6331(a),
the applicable percentage shall be 15 percent.
(2) Underpayment
The term ''underpayment'' means the excess of the amount of the
tax required to be deposited over the amount, if any, thereof
deposited on or before the date prescribed therefor.
(c) Exception for first-time depositors of employment taxes
The Secretary may waive the penalty imposed by subsection (a) on
a person's inadvertent failure to deposit any employment tax if -
(1) such person meets the requirements referred to in section
7430(c)(4)(A)(ii),
(2) such failure -
(A) occurs during the first quarter that such person was
required to deposit any employment tax; or
(B) if such person is required to change the frequency of
deposits of any employment tax, relates to the first deposit to
which such change applies, and
(3) the return of such tax was filed on or before the due date.
For purposes of this subsection, the term ''employment taxes''
means the taxes imposed by subtitle C.
(d) Authority to abate penalty where deposit sent to Secretary
The Secretary may abate the penalty imposed by subsection (a)
with respect to the first time a depositor is required to make a
deposit if the amount required to be deposited is inadvertently
sent to the Secretary instead of to the appropriate government
depository.
(e) Designation of periods to which deposits apply
(1) In general
A deposit made under this section shall be applied to the most
recent period or periods within the specified tax period to which
the deposit relates, unless the person making such deposit
designates a different period or periods to which such deposit is
to be applied.
(2) Time for making designation
A person may make a designation under paragraph (1) only during
the 90-day period beginning on the date of a notice that a
penalty under subsection (a) has been imposed for the specified
tax period to which the deposit relates.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 826; Pub. L. 91-172, title IX,
Sec. 943(b), Dec. 30, 1969, 83 Stat. 728; Pub. L. 94-455, title
XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L.
97-34, title VII, Sec. 724(a), (b)(1), (3), Aug. 13, 1981, 95 Stat.
344, 345; Pub. L. 99-509, title VIII, Sec. 8001(a), Oct. 21, 1986,
100 Stat. 1951; Pub. L. 101-239, title VII, Sec. 7742(a), Dec. 19,
1989, 103 Stat. 2405; Pub. L. 104-168, title III, Sec. 304(a),
title VII, Sec. 701(c)(3), July 30, 1996, 110 Stat. 1458, 1464;
Pub. L. 105-206, title III, Sec. 3304(a)-(c), July 22, 1998, 112
Stat. 742.)
Miscellaneous
AMENDMENTS
1998 - Subsec. (c)(2). Pub. L. 105-206, Sec. 3304(b)(1), amended
par. (2) generally. Prior to amendment, par. (2) read as follows:
''such failure occurs during the 1st quarter that such person was
required to deposit any employment tax, and''.
Subsec. (e). Pub. L. 105-206, Sec. 3304(a), added subsec. (e).
Subsec. (e)(1). Pub. L. 105-206, Sec. 3304(c), reenacted heading
without change and amended text of par. (1) generally. Prior to
amendment, text read as follows: ''A person may, with respect to
any deposit of tax to be reported on such person's return for a
specified tax period, designate the period or periods within such
specified tax period to which the deposit is to be applied for
purposes of this section.''
1996 - Subsec. (c). Pub. L. 104-168, Sec. 304(a), added subsec.
(c).
Subsec. (c)(1). Pub. L. 104-168, Sec. 701(c)(3), substituted
''section 7430(c)(4)(A)(ii)'' for ''section 7430(c)(4)(A)(iii)''.
Subsec. (d). Pub. L. 104-168, Sec. 304(a), added subsec. (d).
1989 - Pub. L. 101-239 substituted ''taxes'' for ''taxes or
overstatement of deposits'' as section catchline and amended text
generally, revising substance and structure.
1986 - Subsec. (a). Pub. L. 99-509 substituted ''10 percent'' for
''5 percent''.
1981 - Pub. L. 97-34, Sec. 724(b)(1), inserted ''or overstatement
of deposits'' after ''taxes'' in section catchline.
Subsec. (a). Pub. L. 97-34, Sec. 724(b)(3), substituted
''Underpayment of deposits'' for ''Penalty'' in heading.
Subsec. (b). Pub. L. 97-34, Sec. 724(a), substituted provisions
relating to conditions for imposition of penalties for overstated
deposit claims and definition of ''overstated deposit claim'', for
provisions relating to imposition of penalties after due date for
return.
1976 - Subsec. (a). Pub. L. 94-455 struck out ''or his delegate''
after ''Secretary''.
1969 - Subsec. (a). Pub. L. 91-172 substituted provisions
imposing a penalty of five percent for the failure to deposit on
the date prescribed any amount of tax imposed by this title, for
provisions imposing a penalty of one percent of the amount of
underpayment each month but not to exceed six percent in the
aggregate.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-206, title III, Sec. 3304(d), July 22, 1998, 112
Stat. 742, provided that:
''(1) In general. - The amendments made by this section (amending
this section) shall apply to deposits required to be made after the
180th day after the date of the enactment of this Act (July 22,
1998).
''(2) Application to current liabilities. - The amendment made by
subsection (c) (amending this section) shall apply to deposits
required to be made after December 31, 2001.''
EFFECTIVE DATE OF 1996 AMENDMENT
Section 304(b) of Pub. L. 104-168 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
deposits required to be made after the date of the enactment of
this Act (July 30, 1996).''
Amendment by section 701(c)(3) of Pub. L. 104-168 applicable in
case of proceedings commenced after July 30, 1996, see section
701(d) of Pub. L. 104-168, set out as a note under section 6404 of
this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7742(c) of Pub. L. 101-239 provided that: ''The
amendments made by this section (amending this section) shall apply
to deposits required to be made after December 31, 1989.''
EFFECTIVE DATE OF 1986 AMENDMENT
Section 8001(b) of Pub. L. 99-509 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
penalties assessed after the date of the enactment of this Act
(Oct. 21, 1986).''
EFFECTIVE DATE OF 1981 AMENDMENT
Section 724(c) of Pub. L. 97-34 provided that: ''The amendments
made by this section (amending this section and sections 5684 and
5761 of this title) shall apply to returns filed after the date of
the enactment of this Act (Aug. 13, 1981).''
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable with respect to deposits
the time for making of which is after Dec. 31, 1969, see section
943(d) of Pub. L. 91-172, set out as a note under section 6651 of
this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 5684, 5761 of this title.
