What is the penalty for late tax deposits between 1-5 days?

The penalty for late tax deposits that occur between 1 to 5 days is 2%. This penalty rate is established to encourage timely submission of tax payments, as the IRS and state tax authorities emphasize the importance of adhering to deadlines to maintain proper tax compliance. The 2% penalty serves as a relatively mild deterrent for short delays, promoting better adherence to tax obligations before escalating the penalties for more significant delays.

In contrast, higher penalty rates apply for longer periods of non-compliance, as they reflect a greater responsibility on the taxpayer's part to fulfill their tax duties. Understanding the varying penalty structures is crucial for contractors and businesses to manage their financial planning and avoid unnecessary costs associated with late payments.