US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 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.

Aug. 16, 1954, ch. 73668A Stat. 826Pub. L. 91–172, title IX, § 943(b)83 Stat. 728Pub. L. 94–455, title XIX, § 1906(b)(13)(A)90 Stat. 1834Pub. L. 97–34, title VII, § 724(a)95 Stat. 344Pub. L. 99–509, title VIII, § 8001(a)100 Stat. 1951Pub. L. 101–239, title VII, § 7742(a)103 Stat. 2405Pub. L. 104–168, title III, § 304(a)110 Stat. 1458Pub. L. 105–206, title III, § 3304(a)112 Stat. 742(, ; , , ; , , ; , (b)(1), (3), , , 345; , , ; , , ; , title VII, § 701(c)(3), , , 1464; –(c), , .)

Editorial Notes

Amendments

Pub. L. 105–206, § 3304(b)(1)1998—Subsec. (c)(2). , 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”.

Pub. L. 105–206, § 3304(a)Subsec. (e). , added subsec. (e).

Pub. L. 105–206, § 3304(c)Subsec. (e)(1). , 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.”

Pub. L. 104–168, § 304(a)1996—Subsec. (c). , added subsec. (c).

Pub. L. 104–168, § 701(c)(3)Subsec. (c)(1). , substituted “section 7430(c)(4)(A)(ii)” for “section 7430(c)(4)(A)(iii)”.

Pub. L. 104–168, § 304(a)Subsec. (d). , added subsec. (d).

Pub. L. 101–2391989— substituted “taxes” for “taxes or overstatement of deposits” as section catchline and amended text generally, revising substance and structure.

Pub. L. 99–5091986—Subsec. (a). substituted “10 percent” for “5 percent”.

Pub. L. 97–34, § 724(b)(1)1981—, inserted “or overstatement of deposits” after “taxes” in section catchline.

Pub. L. 97–34, § 724(b)(3)Subsec. (a). , substituted “Underpayment of deposits” for “Penalty” in heading.

Pub. L. 97–34, § 724(a)Subsec. (b). , 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.

Pub. L. 94–4551976—Subsec. (a). struck out “or his delegate” after “Secretary”.

Pub. L. 91–1721969—Subsec. (a). 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)112 Stat. 742

“(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 [].
“(2)

Application to current liabilities .—

The amendment made by subsection (c) [amending this section] shall apply to deposits required to be made after .”
, , , provided that:

Effective Date of 1996 Amendment

Pub. L. 104–168, title III, § 304(b)110 Stat. 1459

“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 [].”
, , , provided that:

section 701(c)(3) of Pub. L. 104–168section 701(d) of Pub. L. 104–168section 6404 of this titleAmendment by applicable in case of proceedings commenced after , see , set out as a note under .

Effective Date of 1989 Amendment

Pub. L. 101–239, title VII, § 7742(c)103 Stat. 2405

“The amendments made by this section [amending this section] shall apply to deposits required to be made after .”
, , , provided that:

Effective Date of 1986 Amendment

Pub. L. 99–509, title VIII, § 8001(b)100 Stat. 1951

“The amendment made by subsection (a) [amending this section] shall apply to penalties assessed after the date of the enactment of this Act [].”
, , , provided that:

Effective Date of 1981 Amendment

Pub. L. 97–34, title VII, § 724(c)95 Stat. 345

“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 [].”
, , , provided that:

Effective Date of 1969 Amendment

Pub. L. 91–172section 943(d) of Pub. L. 91–172section 6651 of this titleAmendment by applicable with respect to deposits the time for making of which is after , see , set out as a note under .