Failure to Deposit Penalty Relief

The IRS has issued interim guidance for taxpayers who are unable to get a bank account or make other arrangements for depositing their federal tax obligations by electronic funds transfer and thus, subject to a penalty for failure to deposit under section 6656.

For unbanked taxpayers who are timely in meeting their tax deposit obligations, the IRS will not impose or will update the failure to deposit penalty if a taxpayer can show that they made reasonable efforts, but were unable to get a bank account during the period at issue. To request penalty relief under this guidance, the taxpayer must include a signed statement that explains the taxpayer's attempt to get a bank account, and must include any cooperating documentation (denied account applications, correspondence from bank, etc.).

To help avoid processing delays, please include “unbanked taxpayer” or a statement about being unable to get a bank account in the subject line or at the beginning of the request for relief from the penalty

This guidance does not apply to situations in which the taxpayer can obtain a bank account, but chooses not to maintain a bank account. Such cases will continue to be handled on a case-by-case basis.

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