Georgia Payroll Tax Penalties & Interest Checklist

Georgia Payroll Tax Penalties & Interest Checklist

Understanding Penalties and Interest

Georgia withholding tax penalties arise when employers fail to file payroll tax returns on time or do not pay the full amount owed to the state. Interest accrues monthly on unpaid payroll tax amounts from the due date until the tax is fully paid.

The Georgia Department of Revenue assesses these charges based on the type of failure and how long the violation persists. Ignoring payroll tax penalties and interest leads to additional enforcement actions, including liens and wage garnishments against the business owner or responsible parties.

A payroll tax penalty is a financial charge imposed by the state when an employer misses filing or payment deadlines. Interest compounds monthly on unpaid balances at an annual rate equal to the Federal Reserve prime rate plus three percent.

State Enforcement and Compliance Requirements

Georgia imposes penalties to encourage employers to file payroll tax returns and make deposits on time. The state uses these charges as an administrative enforcement tool to maintain tax compliance across all businesses operating within its jurisdiction.

Penalty Structure and Reasonable Cause

The penalty for failing to file a required return is twenty-five dollars plus five percent of the tax withheld before application of any payments or credits. An additional five percent is added for each subsequent late month, with the maximum penalty reaching twenty-five dollars plus twenty-five percent of the tax withheld.

O.C.G.A. Section 48-7-126 provides an exception when failure is due to reasonable cause and not willful neglect. You can request a penalty waiver by demonstrating that circumstances beyond your control prevented timely compliance.

The Department of Revenue evaluates each penalty waiver request individually, considering your compliance history and supporting documentation. Form TSD-3 allows you to request a waiver of penalty through the Georgia Tax Center or by written submission.

Interest Calculation and Accrual

Interest on past due taxes accrues monthly from the date the tax is due until the date you pay the tax. Georgia law states that any period of less than one month shall be considered to be one month for interest calculation purposes.

For amounts accruing before July 1, 2016, the state applied a twelve percent annual rate.

Beginning July 1, 2016, accrual occurs at an annual rate equal to the Federal Reserve prime rate plus three percent.

The rate is reviewed and may be adjusted in January of each subsequent calendar year. Unpaid balances continue to accrue interest even while a payment plan is in effect, stopping only when you pay the taxes in full.

Collection Actions and Enforcement

The Georgia Department of Revenue escalates collection efforts when penalties and interest remain unpaid. Filing a tax lien against the business becomes an option for the state, creating a public record that affects creditworthiness.

Wage garnishment can be issued to collect money directly from the delinquent taxpayer’s personal wages or bank accounts. Authority to suspend or revoke alcohol licenses for outstanding tax liabilities exists under O.C.G.A. Sections 3-2-2, 3-2-3, 3-2-6, and 48-2-12.

Civil penalty assessments under O.C.G.A. Section 48-7-126 are separate from criminal violations. Willful failure to deduct and withhold taxes becomes unlawful under O.C.G.A. Section

48-7-127 for persons required to do so.

Steps to Resolve Penalties and Interest

You must obtain the official notice from the Department of Revenue that details the penalty or interest charge. The notice shows the tax period, the original amount owed, the penalty amount, the interest amount, and the total due.

Review the notice and compare the amounts to your payroll tax records and prior filings.

Contact the agency at the number provided on the notice to confirm the penalty and interest amounts.

Ask the state representative to explain the calculation method used. Request information about available options for resolving the debt, including payment plans and penalty abatement.

Requesting Penalty Relief