Top risk areas
- Late or missed deposits
- Using withheld taxes as working capital
- Misclassification of workers
- Unreconciled payroll liability accounts
Penalty types
- Failure‑to‑deposit penalties (tiered by lateness)
- Failure‑to‑file & failure‑to‑pay penalties
- Trust Fund Recovery Penalty (personal liability)
Abatement & reasonable cause
First‑Time Abatement may apply in certain cases. Reasonable‑cause letters should explain facts, timelines, and corrective actions.
Controls & best practices
- Dual approvals for deposits and return filings
- Calendar reminders & deposit threshold monitoring
- Monthly reconciliations of 941/940 and state accounts