Employers use Form 941 to report income taxes, Social Security tax, or Medicare tax withheld from employees’ paychecks and pay their portion of Social Security or Medicare taxes. Employers are required to withhold FICA taxes, or Social Security and Medicare taxes, from their employee wages and pay the employer portion, which can vary depending on payroll size, although FICA taxes are commonly paid monthly or semi-weekly and are reported quarterly via IRS Form 941, Employer's Quarterly Federal Tax Return.
The IRS will penalize a business that deposits its payroll taxes late or files its Form 941 late. If a required payroll tax deposit is one to five days late, the IRS charges a penalty of two percent of a required payment.
Any deposits made between six and 15 days late have a five percent penalty, and a 10 percent penalty for deposits more than 16 days late, plus interest. If you file your Form 941 late, the IRS will impose a penalty of five percent per month, or the partial month, up to a maximum of 25 percent.