Ezel / IRS Rulings / 200953021

CCA 200953021: Advice on the section 6656 employment-tax deposit penalty

Number
200953021
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Failure to Make Deposit of Taxes (Penalty v. No Penalty)
Topics
Procedure, penalties, and administration
Code sections
§ 6656
Ruling dated
December 8, 2009
Publicly released
January 1, 2010
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advice discussed the penalty under IRC § 6656 for failing to timely deposit tax. It stated that the penalty is generally 10 percent of the underpayment, absent reasonable cause. The advice described Revenue Ruling 75-191 as limiting the penalty for taxes that should have been withheld from employee compensation to the employer's share of FICA taxes, and noted that a Seventh Circuit decision discussed the penalty without citing that revenue ruling or adopting that limitation. Counsel asked for additional facts to provide further assistance.

Ruling snapshot

  • Question: How does the section 6656 penalty apply when employment taxes were not timely deposited?
  • Outcome: Advice given
  • Key authorities: IRC § 6656; Rev. Rul. 75-191; University of Chicago v. United States, 547 F.3d 773 (7th Cir. 2008)

Full text (IRS public release)

ID: CCA_2009120821210741 Number: 200953021
Release Date: 12/31/2009
Office: ----------------------------
UILC: 6656.00-00

From: -------------------
Sent: Tuesday, December 08, 2009 9:21:29 PM
To: -----------------------
Cc: --------------------
Subject: RE: Informal

Section 6656 imposes a mandatory penalty of 10% of the amount of the underpayment when a taxpayer fails to timely deposit tax due, absent reasonable cause. Revenue Ruling 75-191 provides that the section 6656 penalty does not apply in the case of failure to deposit taxes which should have been withheld from compensation paid to employees, but which were not withheld. According to the Rev. Rul., the section 6656 penalty will only apply to the extent of the employer's failure to deposit the employer's share of the FICA taxes. The 7th Circuit in University of Chicago v US, 547 F.3d 773, provides a good discussion of the application of the penalty, but interestingly does not cite the Rev. Rul., nor does it limit the penalty to the employer's share.

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