Failure to deposit penalty
From Wikicpa
The IRS may assess an “averaged” failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete the monthly liability section of Form 941 when your total adjusted tax liability shown on Form 941 exceeded $2,500.
IRS may also assess an “averaged” FTD penalty of 2% to 10% if you are a semiweekly schedule depositor and your total adjusted tax liability shown on Form 941 exceeded $2,500 and you:
(1) completed the monthly liability section of Form 941 instead of Schedule B (Form 941),
(2) failed to attach a properly completed Schedule B (Form 941), or
(3) improperly completed Schedule B (Form 941) by, for example, entering tax deposits instead of tax liabilities in the numbered spaces.
The FTD penalty is computed by taking your total adjusted tax liability shown on Form 941 and distributing it equally throughout the tax period. As a result, your deposits and payments may not be counted as timely because the actual dates of your tax liabilities cannot be accurately determined.
An “averaged” FTD penalty can be avoided by reviewing your return prior to filing it. Follow these steps before submitting your Form 941.
If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly liability section shown on Form 941.
If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates your employees were paid.
Verify that your total liability shown on Form 941 or the bottom of Schedule B (Form 941) equals your total adjusted tax liability shown on Form 941.
Do not show negative amounts in the monthly liability section Schedule B (Form 941). If your prior period correction results in a decrease to your tax liability, reduce your liability for the day that you discovered the error by the tax decrease resulting from the error, but not below zero. Apply any remaining decrease to subsequent liabilities.
Source: irs.gov
