New Hampshire Payroll Tax Penalties & Interest
Checklist
New Hampshire payroll tax penalties and interest are additional charges the state applies when unemployment insurance taxes are filed late, paid late, or underpaid.
These charges accumulate on top of the original tax amount, increasing the total debt over time. Understanding how New Hampshire calculates and applies these penalties helps you know what you owe and what happens next if taxes remain unpaid.
Penalties and interest represent a critical stage in the state's collection process: they signal that an account is no longer in good standing, and further action by the state may follow if the issue is not addressed. The New Hampshire Department of Revenue
Administration (DRA) and the New Hampshire Employment Security administer these
charges in accordance with state law.
What This Issue Means
Payroll tax penalties and interest are two separate charges that state agencies add to your account when State Unemployment Insurance tax obligations are not met on time.
In New Hampshire, payroll taxes primarily refer to employers' unemployment insurance taxes paid to the New Hampshire Employment Security agency. These are distinct from workers' compensation insurance, which employers purchase from licensed carriers and administer through the Workers' Compensation Division of the Department of Labor.
A penalty is a fixed or percentage-based charge imposed for breaking a tax rule, such as filing late or paying late. Under state law RSA 21-J:33, if the failure to pay is not due to fraud, the penalty equals 10 percent of the amount of the nonpayment or underpayment. Interest is an annual charge calculated on a simple-interest basis and applied proportionally to the number of days the underpayment remains outstanding.
The interest rate for 2026 is 9 percent annually.
When you see a notice referencing payroll tax penalties, it means the state has reviewed your account and determined that both charges apply. This notice typically appears after the initial due date has passed and the state has calculated what you owe based on your quarterly wage reports or tax returns.
Why the State Issued This or Requires This
New Hampshire imposes penalties and interest to encourage the timely filing and payment of unemployment insurance taxes. These taxes fund unemployment insurance programs that provide benefits to eligible workers who file unemployment claims. When taxes are not paid on time, the state's ability to deliver these services is affected, and other employers' unemployment tax rates may be adjusted through the experience rating system to compensate.
The state calculates penalties and interest automatically when it reviews unpaid accounts. This is part of standard tax compliance administration: state agencies apply these charges in accordance with state law without having to make a discretionary decision in each case. The charges reflect both the seriousness of noncompliance and the cost to the state of managing unpaid tax accounts and back taxes.
What Happens If This Is Ignored
If penalties and interest are not paid, the balance continues to grow because interest accrues on any unpaid amount at a simple rate calculated on a pro rata basis. The state may escalate collection efforts, including sending additional notices, suspending business licenses, placing liens on property, or pursuing wage garnishment and bank levies. The longer the account remains unpaid, the more expensive the total debt becomes.
According to state agencies, accounts that remain unpaid may eventually be referred for enforcement action. Tax policy requires the Department of Revenue to pursue collection through available legal remedies. However, specific timeframes for escalation are not publicly detailed in standard state guidance.
What This Does NOT Mean
A notice of penalties and interest does NOT mean your business license has been suspended, your assets have been seized, or criminal charges have been filed against you. These charges have been calculated and added to your account, but the state has not yet taken enforcement action simply by issuing this notice.
This also does NOT mean the penalties and interest cannot be reviewed or addressed.
In some cases, taxpayers can request penalty abatement (removal of penalties under certain conditions), though this must be done through a formal process. The
Commissioner of the Department of Revenue Administration has the authority to abate penalties in whole or in part when specific criteria are met, including reasonable cause for the failure to pay.
Checklist: What to Do After Receiving This or Identifying
This Issue
Step 1: Locate and Review the Notice
Find the notice from the New Hampshire Department of Revenue Administration or New
Hampshire Employment Security. Look for the following information: the tax period covered, the penalty amount and reason, the interest amount and calculation dates, the total amount owed, and any payment deadline listed. If the notice references your Tax
Rate Determination Letter or quarterly wage reports, gather those documents as well.
Step 2: Verify the Accuracy of the Notice
Review your own records to confirm: the filing date (was the return filed late?), the payment date (was the payment received late by the state?), the tax amount reported initially, and whether you have proof of timely payment or filing. Compare the notice against your New Hampshire Employer Account records and any documentation from the Employer WebTax System if you use that platform.
Step 3: Determine If You Can Pay the Full Balance
Assess your ability to pay: the full amount owed (tax plus penalties plus interest), any partial payment you can make immediately, or whether you need a payment plan or other arrangement. Consider consulting a tax advisor if the amount is substantial or if you have questions about your financial planning options.
Step 4: Contact the Appropriate State Agency
Reach out to discuss your account. For State Unemployment Insurance taxes, contact
New Hampshire Employment Security at (603) 224-3311. For other business taxes administered by the Department of Revenue, contact the New Hampshire Department of Revenue Administration at (603) 230-5920. You can also access the WEBTAX
System online for account information. Provide them with your business identification number, tax period, and notice information.
Step 5: Ask Whether a Payment Plan Is Available
Inquire about: whether the state offers payment plans for outstanding balances, the terms of any available plan, and how to apply for a plan if one exists. If you owe tax, penalties, or interest, you may request an installment payment agreement with the
Department of Revenue Administration. Ask about payment options, including
Automated Clearing House (ACH) transfers for easier processing.
Step 6: Ask About Penalty Abatement Eligibility
Request information about: whether your situation qualifies for penalty review or removal, what documentation the state needs to consider a request, and any deadline for submitting an abatement request. Penalties may be abated if the failure to pay was due to reasonable cause and not willful neglect, or if the penalty resulted from erroneous written advice from the Department of Revenue.
Step 7: Document All Communications
Keep records of: the date and time you contacted the state, the name of the person you spoke with, what was discussed, any commitments made by the state, and any reference numbers or case numbers provided. Maintain copies of all correspondence for your payroll information files and potential payroll audits.
Step 8: Submit Any Required Documentation
If the state requests additional information, gather the documents they ask for (such as quarterly wage reports, employer registration documentation, or proof of payment), send them by the provided deadline, keep copies for your records, and request a return receipt or confirmation of receipt. Some documents may need to be submitted on magnetic media or via electronic filing systems, depending on your employer's reporting requirements.
Step 9: Make a Payment If You Can
If paying in full or partially: ask how to submit payment (by mail, online through the
WEBTAX System, or via Automated Clearing House), keep proof of payment, and confirm that the payment was received and applied correctly. The state accepts various payment methods to ensure employers' tax compliance.
- Missing Deadlines on Follow-Up Requests: If the state asks for
- Ignoring Notices or Correspondence: Unopened or unread notices from state
- Sending Incomplete Information: If the state requests specific documents or
- Assuming Payment Plans Are Automatic: Payment plans are not granted
- Failing to Keep Proof of Payment: Without documentation that a payment was
- Not Following Up After Submission: If the state does not confirm receipt of
- Assuming Penalties Are Automatically Removed: Penalties are only removed
- Confusing Federal and State Obligations: Remember that New Hampshire
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 10: Wait for State Processing
After submitting information or making a payment, allow the state time to process your submission, watch for follow-up notices, and do not assume the matter is closed without
written confirmation. Processing times vary depending on the complexity of your account and the volume of submissions the state is handling.
What Happens After This Is Completed
After you complete these steps, the state typically reviews any documentation you submitted and any payments you made. The agency will apply payments to your account and may issue an updated notice showing the remaining balance. If you requested penalty abatement, the state will review your request and notify you of its decision in writing.
If a payment plan has been established, the agency will send you a payment agreement outlining the schedule and the amount due each period. If your account is not yet resolved, the state may send additional notices or take further collection action. You may receive correspondence referencing your employer registration number or UI wage base calculations if the matter relates to unemployment insurance taxes.
Common Mistakes to Avoid documentation or a response by a specific date, missing that deadline may result in the state proceeding with collection without your input. agencies may contain important deadlines or instructions that affect your account and tax compliance status. information (such as quarterly wage reports or proof of employer registration), providing incomplete or unrelated materials may delay resolution. automatically. The state must approve them, and they require a formal request and agreement. sent and received, disputes about whether payment occurred can delay resolution and affect your employer's reporting records. your information or payment through the WEBTAX System or by mail, contact them again to verify. through a formal abatement request and state approval. Do not assume they will disappear on their own. does not have a state income tax on wages, unlike the federal income tax.
However, employers must still comply with federal payroll taxes, including FICA
Taxes (Social Security and Medicare) through Form 941, as well as federal payroll laws, in addition to state unemployment insurance taxes.
Frequently Asked Questions
What is the difference between a penalty and interest on payroll taxes?
A penalty is a one-time charge (typically 10 percent under state payroll tax penalty rates) for late filing or late payment. Interest is an annual charge (9 percent for 2026)
calculated on a simple-interest basis, applied proportionally based on the number of days the tax remains unpaid. Both are calculated separately and added to your total debt.
Can I request that penalties be removed?
New Hampshire allows taxpayers to request penalty abatement in some situations. The state has specific criteria for when penalties may be removed, including reasonable cause for the failure to pay. Contact the Department of Revenue Administration or the
New Hampshire Employment Security to determine whether your situation qualifies and what documentation is required to submit a request.
How is interest calculated on payroll taxes?
New Hampshire calculates interest using simple interest (not compound interest) at an annual rate. For 2026, the yearly underpayment interest rate is 9 percent. Interest is computed on a pro rata basis based on the number of days the underpayment remains outstanding during the 365-day calendar year. You can use an interest calculator or ask the agency to provide the exact rate applicable to your tax period.
Does New Hampshire have a personal income tax or state income tax on wages?
No. New Hampshire does not impose a personal income tax or state income tax on wages (W-2 income). However, the state previously had an Interest & Dividends Tax on interest and dividend income, which has been phased out. Employers must still pay
State Unemployment Insurance taxes and comply with federal income tax withholding requirements.
What if I believe the penalty or interest was miscalculated?
Contact the state agency and provide your own calculation along with documentation of the original tax, filing date, and payment date. The state will review your claim and notify you of its determination through written correspondence.
Can I appeal the state's decision on penalties?
Yes. Taxpayers have the right to appeal penalties and assessments by filing a petition for redetermination with the NH DRA Hearings Bureau within 60 days after the notice of the evaluation. After the Hearings Bureau decision, taxpayers may appeal to the Board of Tax and Land Appeals or the Superior Court within 30 days, as provided by state law.
If I set up a payment plan, will interest stop accumulating?
Interest typically continues to accrue on unpaid balances even during a payment plan, calculated at the simple annual rate set by State & Local Taxation rules. However, confirm this with the state agency when discussing payment plan terms.
What happens if I miss a payment on a payment plan?
This information is not detailed in publicly available New Hampshire state guidance.
Contact the state agency to ask about the consequences of a missed payment and whether the plan can be modified under current tax policy.
Where can I find my unemployment tax rates and experience rating information?
Your unemployment tax rates are provided in the Tax Rate Determination Letter sent by
New Hampshire Employment Security. Your experience rating is based on your claims history and affects your future tax rates. You can access this information through your
New Hampshire Employer Account or the Employer WebTax System.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.
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