§ 6656. Failure to make deposit of taxes

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 826 · 68A Stat. 826

   Enacted · 26 U.S.C. § 6656

   Aug. 16, 1954, ch. 736, 68A Stat. 826

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 826

2. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 title IX § 943(b) · 83 Stat. 487

   Substituted · 26 U.S.C. § 6656(a)

   Pub. L. 91–172 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

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 91–172 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.

   Enacted provision · exact public law section
   (b) Failure To Make Deposit of Tax.— Section 6656(a) (relating to penalty for failure to make deposit of taxes) is amended by striking out the first sentence and inserting in lieu thereof the following: “In case of failure by any person required by this title or by regulation of the Secretary or his delegate under this title to deposit on the date prescribed therefor any amount of tax imposed by this title in such government depositary 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 of 5 percent of the amount of the underpayment.”

3. 1976

   Pub. L. 94–455 title XIX § 1906(b)(13)(A) · 90 Stat. 1520

   Struck · 26 U.S.C. § 6656(a)

   Pub. L. 94–455 struck out “or his delegate” after “Secretary”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

   Enacted provision · exact public law section
   (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

4. 1981

   Economic Recovery Tax Act of 1981

   Pub. L. 97–34 § 724(b)(1) · 95 Stat. 175

   Inserted · 26 U.S.C. § 6656

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

   Source evidence

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

   Enacted provision · exact public law section
   (1) The heading of section 6656 is amended by inserting “OR OVERSTATEMENT OF DEPOSITS” after “TAXES”.

5. 1981

   Economic Recovery Tax Act of 1981

   Pub. L. 97–34 § 724(b)(3) · 95 Stat. 175

   Substituted · 26 U.S.C. § 6656(a)

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

   Source evidence

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

   Enacted provision · exact public law section
   (3) The heading of subsection (a) of section 6656 is amended by striking out “Penalty” and inserting in lieu thereof “Underpayment of Deposits”.

6. 1981

   Economic Recovery Tax Act of 1981

   Pub. L. 97–34 § 724(a) · 95 Stat. 175

   Substituted · 26 U.S.C. § 6656(b)

   Pub. L. 97–34, § 724(a), 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

   Source evidence

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

   Enacted provision · exact public law section
   (a) General Rule.— Subsection (b) of section 6656 (relating to failure to make deposit of taxes) is amended to read as follows: “(b) Overstated Deposit Claims.— “(1) Imposition of penalty.— Any person who makes an overstated deposit claim shall be subject to a penalty equal to 25 percent of such claim. “(2) Overstated deposit claim defined.— For purposes of this subsection, the term ‘overstated deposit claim’ means the excess of— “(A) the amount of tax under this title which any person claims, in a return filed with the Secretary, that such person has deposited in a government depositary under section 6302(c) for any period, over “(B) the aggregate amount such person has deposited in a government depositary under section 6302(c), for such period, on or before the date such return is filed. “(3) Penalty not imposed in certain cases.— The penalty under paragraph (1) shall not apply if it is shown that the excess described in paragraph (2) is due to reasonable cause and not due to willful neglect. “(4) Penalty in addition to other penalties.— The penalty under paragraph (1) shall be in addition to any other penalty provided by law.”

7. 1986

   Omnibus Budget Reconciliation Act of 1986

   Pub. L. 99–509 title VIII § 8001(a) · 100 Stat. 1874

   Substituted · 26 U.S.C. § 6656(a)

   Pub. L. 99–509 substituted “10 percent” for “5 percent”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 99–509 substituted “10 percent” for “5 percent”.

   Enacted provision · exact public law section
   (a) In General.— Subsection (a) of section 6656 of the Internal Revenue Code of 1954 (relating to underpayment of deposits) is Post, p. 2095; 26 USC 6656. amended by striking out “5 percent” and inserting in lieu thereof “10 percent”.

8. 1989

   Improved Penalty Administration and Compliance Tax Act

   Pub. L. 101–239 title VII § 7742(a) · 103 Stat. 2106

   1. Substituted · 26 U.S.C. § 6656

      Pub. L. 101–239 substituted “taxes” for “taxes or overstatement of deposits” as section catchline

   2. Amended · 26 U.S.C. § 6656

      Pub. L. 101–239 amended text generally, revising substance and structure

   Source evidence

   Code amendment note
   Pub. L. 101–239 substituted “taxes” for “taxes or overstatement of deposits” as section catchline and amended text generally, revising substance and structure.

   Enacted provision · exact public law section
   (a) General Rule.— Section 6656 (relating to failure to make deposit of taxes or overstatement of deposits) is amended to read as follows: “SEC. 6456. 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.”

9. 1996

   Taxpayer Bill of Rights 2

   Pub. L. 104–168 § 304(a) · 110 Stat. 1452

   Added · 26 U.S.C. § 6656(c)

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

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 104–168, § 304(a), added subsec. (c).

   Enacted provision · exact public law section
   (a) In general.— Section 6656 (relating to failure to make deposit of taxes) is amended by adding at the end the following new subsections: “(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)(AXiii), “(2) such failure occurs during the 1st quarter that such person was required to deposit any employment tax, 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.”.

10. 1996

    Taxpayer Bill of Rights 2

    Pub. L. 104–168 § 701(c)(3) · 110 Stat. 1452

    Substituted · 26 U.S.C. § 6656(c)(1)

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

    Source evidence

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

    Enacted provision · exact public law section
    (3) Sections 6404(g) and 6656(c)(1), as amended by this Act, are each amended by striking “section 7430(c)(4)(A)(iii)” and inserting “section 7430(c)(4)(A)(ii)”.

11. 1996

    Taxpayer Bill of Rights 2

    Pub. L. 104–168 § 304(a) · 110 Stat. 1452

    Added · 26 U.S.C. § 6656(d)

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

    Source evidence

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

    Enacted provision · exact public law section
    (a) In general.— Section 6656 (relating to failure to make deposit of taxes) is amended by adding at the end the following new subsections: “(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)(AXiii), “(2) such failure occurs during the 1st quarter that such person was required to deposit any employment tax, 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.”.

12. 1998

    Taxpayer Bill of Rights 3

    Pub. L. 105–206 § 3304(b)(1) · 112 Stat. 685

    Amended · 26 U.S.C. § 6656(c)(2)

    Pub. L. 105–206, § 3304(b)(1), 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”

    Source evidence

    Code amendment note
    Subsec. (c)(2). Pub. L. 105–206, § 3304(b)(1), 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”.

    Enacted provision · exact public law section
    (1) In general.— Paragraph (2) of section 6656(c) (relating to exemption for first-time depositors of employment taxes) is amended to read as follows: “(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”.

    Effective date note
    Pub. L. 105–206, title III, § 3304(d), July 22, 1998, 112 Stat. 742, provided that:

13. 1998

    Taxpayer Bill of Rights 3

    Pub. L. 105–206 § 3304(a) · 112 Stat. 685

    Added · 26 U.S.C. § 6656(e)

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

    Source evidence

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

    Enacted provision · exact public law section
    (a) Taxpayer May Designate Periods to Which Deposits Apply.— Section 6656 (relating to underpayment of deposits) is amended by adding at the end the following new subsection: “(e) Designation of Periods to Which Deposits Apply.— “(1) In general.— 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. “(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.”.

    Effective date note
    Pub. L. 105–206, title III, § 3304(d), July 22, 1998, 112 Stat. 742, provided that:

14. 1998

    Taxpayer Bill of Rights 3

    Pub. L. 105–206 § 3304(c) · 112 Stat. 685

    Amended · 26 U.S.C. § 6656(e)(1)

    Pub. L. 105–206, § 3304(c), 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.”

    Source evidence

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

    Enacted provision · exact public law section
    (c) Periods Apply to Current Liabilities Unless Designated Otherwise.— Paragraph (1) of section 6656(e) (as added by subsection (a) of this section) is amended to read as follows: “(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.”.

    Effective date note
    Pub. L. 105–206, title III, § 3304(d), July 22, 1998, 112 Stat. 742, provided that:

14 of 15 references resolved to an enrolled provision · 1 partial