Title 26 — Internal Revenue CodeRelease 119-73
§6656 Failure to make deposit of taxes
Title 26 › Subtitle Subtitle F— - Procedure and Administration › Chapter CHAPTER 68— - ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE PENALTIES › Subchapter Subchapter A— - Additions to the Tax and Additional Amounts › Part PART I— - GENERAL PROVISIONS › § 6656
Summary
If you fail to put required tax deposits into the right government account on the date they are due, you must pay a penalty unless you can show the missed deposit was for a good reason and not on purpose. The penalty is a percentage of the unpaid deposit: 2% if late up to 5 days, 5% if more than 5 days but not more than 15 days, and 10% if more than 15 days. There is a special rule if the deposit is missed by the earlier of 10 days after the first delinquency notice or the day an immediate payment demand is given. The IRS can waive the penalty for an accidental first-time failure if you meet the rules in section 7430(c)(4)(A)(ii), the failure happened in your first required quarter or was the first deposit after a required change in deposit frequency, and your return was filed on time. The IRS can also cancel the penalty the first time if you accidentally sent the money to the IRS instead of the depository. Deposits are applied to the most recent periods in the tax period unless you tell the IRS otherwise within 90 days after a penalty notice.
Full Legal Text
Title 26, §6656
Internal Revenue Code — Source: USLM XML via OLRC
(a)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)For purposes of subsection (a)—
(1)(A)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)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),
(2)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)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.
(d)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)(1)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)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.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
1998—Subsec. (c)(2). Pub. L. 105–206, § 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, § 3304(a), added subsec. (e). Subsec. (e)(1). Pub. L. 105–206, § 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, § 304(a), added subsec. (c). Subsec. (c)(1). Pub. L. 104–168, § 701(c)(3), substituted “section 7430(c)(4)(A)(ii)” for “section 7430(c)(4)(A)(iii)”. Subsec. (d). Pub. L. 104–168, § 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, § 724(b)(1), inserted “or overstatement of deposits” after “taxes” in section catchline. Subsec. (a). Pub. L. 97–34, § 724(b)(3), substituted “Underpayment of deposits” for “Penalty” in heading. Subsec. (b). Pub. L. 97–34, § 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.
Statutory Notes and Related Subsidiaries
Effective Date
of 1998 Amendment Pub. L. 105–206, title III, § 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 Pub. L. 104–168, title III, § 304(b),
July 30, 1996, 110 Stat. 1459, 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 Pub. L. 101–239, title VII, § 7742(c), Dec. 19, 1989, 103 Stat. 2405, 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 Pub. L. 99–509, title VIII, § 8001(b), Oct. 21, 1986, 100 Stat. 1951, 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 Pub. L. 97–34, title VII, § 724(c), Aug. 13, 1981, 95 Stat. 345, provided that: “The
Amendments
made by this section [amending this section and section 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 AmendmentAmendment 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.
Reference
Citations & Metadata
Citation
26 U.S.C. § 6656
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73