Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled Returns by Year & Form Type

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Heading

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Frequently Asked Questions

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

Filing taxes can feel overwhelming for small employers, especially if you still need to file your 2020 Form 944. This tax return was designed for businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. If you did not file a return by the original due date, the IRS may assess penalties and interest that increase the total tax liability over time.

Leaving a 2020 Form 944 unfiled does not solve the problem. If the tax owed is not fully paid, the IRS can impose failure-to-file and late-payment penalties. These charges continue to grow until the account is resolved, which can result in a much larger balance than the amount of unpaid tax from the tax year itself. Even businesses with limited cash flow must address past-due returns to avoid other penalties.

This guide aims to help you file your return correctly, understand the details of late filing, and explore resolution options. By following step-by-step instructions and learning how the IRS handles unpaid tax, small employers can take good faith action, request relief where reasonable cause applies, and bring their accounts back into compliance.

What is Form 944, and Who Must File It

Form 944 is an IRS form called the Employer’s Annual Federal Tax Return. It was created for small businesses with an annual liability of $1,000 or less in social security, Medicare, and federal income taxes. Instead of filing quarterly Form 941 returns, qualifying employers may file once a year, which reduces paperwork and helps simplify compliance. The tax year covered by Form 944 must still be complete and accurate, even when filed late.

The IRS does not allow employers to choose this filing option independently. To file a return using Form 944, you must receive written notice from the IRS instructing you to use it instead of Form 941. Without this notice, you are required to continue filing quarterly tax returns. If you file incorrectly, the IRS may assess penalties and interest and require you to submit the correct tax return.

Who must file Form 944?

Employers must file Form 944 if their annual liability for federal income taxes, social security, and Medicare is $1,000 or less.
Businesses are required to use Form 944 only if the IRS has issued a written notice instructing them to do so.

Who cannot file Form 944?

Household employers cannot use Form 944 and must report employment taxes on Schedule H with their individual tax return (Form 1040).
Agricultural employers are not eligible to file Form 944 because they must use Form 943 to report taxes for farm workers.
Businesses that did not receive an IRS notice authorizing the use of Form 944 must continue filing Form 941 every quarter.
Employers the IRS specifically instructed to file Form 941 are not allowed to switch to Form 944, regardless of their annual liability.

These rules are in place to ensure that businesses file the correct tax return for their situation. Using the wrong form or failing to file a return by the original due date can cause the IRS to assess penalties, interest, or other penalties, even if the tax owed has already been fully paid.

How to File or Correct an Unfiled 2020 Form 944

Filing or correcting an unfiled 2020 Form 944 requires careful attention because using the wrong form or leaving out required details can result in additional penalties and interest. Since the form is specific to the 2020 tax year, you must use the prior-year version rather than the current one. Following the correct steps will help you file your return accurately and resolve any unpaid tax owed to the IRS.

Step 1: Obtain the Correct Form and Instructions

The IRS requires you to use the official 2020 version of Form 944 and its instructions when filing a return for that tax year. Using the wrong version can delay processing or cause the IRS to reject your filing. You can:

Download the 2020 Form 944 and the official instructions directly from the IRS website under “Prior year forms and instructions.” These PDFs provide the exact details to calculate and report your 2020 tax liability.
If you cannot download paper forms online, call the IRS at 800-829-3676 to request them by mail. Ordering directly from the IRS ensures you work with the correct tax return.
Visit your local IRS office to request copies of the form and instructions in person, although in-person availability may be limited depending on location and staffing.

The correct form is critical because the 2020 version contains the original due date, wage limits, and calculation rules specific to that year.

Step 2: Gather Required Documentation

Before completing your return, you must collect records to calculate your total tax liability for 2020. Without complete records, you risk filing inaccurate information, which could lead the IRS to assess penalties and interest. The documents you need include:

Payroll records that list all wages paid to employees during 2020, including hourly and salaried compensation.
Employee W-4 forms that confirm how much federal income tax should have been withheld from each paycheck.
Documentation of the federal income taxes actually withheld from employee wages, so you can compare them against the correct withholding amounts.
Records of federal tax deposits made to the IRS during 2020 show how much tax you have already paid toward your liability.
Copies of W-2 forms issued to employees must be included with the W-3 transmittal, matching the figures reported on Form 944.
Any notices or letters from the IRS regarding your 2020 filing requirement are important, as they may provide essential details about your account or the required form to file.

Gathering this information ensures you can report the correct tax, address any underpayment, and support your filing if the IRS requests additional information later.

Step 3: Complete the Form Accurately

You must complete the return carefully once you have the correct form and documentation. Errors can lead the IRS to assess penalties, send a bill for underpayment, or require you to submit corrected forms. When completing the 2020 Form 944:

Enter your employer identification number, legal business name, and complete business address exactly as registered with the IRS, despite errors, even though errors can delay processing.
Report the total wages, tips, and other compensation paid to employees in 2020, ensuring that the amounts match your payroll records and W-2 forms.
Record the total amount of federal income taxes withheld from employee wages during the tax year so the IRS can verify that the withholding is accurate.
Calculate the social security and Medicare taxes owed using the 2020 wage limits and percentages, since these may differ from current rates.
Include any adjustments, credits, or overpayments that apply to your account so the IRS can determine your correct tax liability and whether a balance is due or a refund is available.

Accurately completing the form is essential for avoiding mistakes that could increase the amount of tax owed or cause the IRS to question your filing.

Step 4: Address Late Filing

If you are filing after the original due date of January 31, 2021, you should not delay further. The IRS will continue to assess penalties and interest on the unpaid balance until the return is filed. If you cannot pay the tax owed in full, submit as much as possible and attach a written explanation if you believe reasonable cause applies.

Step 5: Choose Your Filing Method

You can file electronically through approved IRS software providers, which offer faster processing and confirmation that your return was received. If you prefer to file on paper, file the form to the correct IRS address listed in the 2020 instructions and use certified mail to ensure you have proof of delivery.

IRS Penalties and Interest for Late or Unfiled Form 944

The IRS will assess penalties and interest if you fail to file a return or pay the tax owed by the original due date. These charges can significantly increase your balance, even if your initial tax liability was small. Understanding how each penalty works helps you avoid unnecessary costs and better plan how to resolve your account.

Late Filing Penalty

The IRS charges a late filing penalty equal to 5 percent of the unpaid tax every month or part of a month that the return remains unfiled after the due date.
This penalty can grow quickly, but is capped at a maximum penalty of 25 percent of the unpaid tax.
If your return is more than 60 days late, the IRS imposes a minimum penalty that is the lesser of $485 (for 2020) or 100 percent of the tax owed. This means you could still face a substantial charge despite your low balance.

Late Payment Penalty

The IRS charges a late payment penalty of 0.5 percent of the unpaid balance for each month or part of a month that the tax remains unpaid after the filing deadline.
This penalty can also increase up to 25 percent of the unpaid tax, creating a heavy financial burden if unresolved.
If you set up an installment agreement, the IRS reduces the rate to 0.25 percent per month, which lowers the total cost of paying late and shows good faith in resolving your account.

Deposit Penalties

If you were required to make federal tax deposits for employee withholding and did not, the IRS may charge a penalty of 2 percent for deposits made one to five days late.
The penalty increases to 5 percent for deposits six to 15 days late.
For deposits made more than 15 days late, the penalty rises to 10 percent of the deposit amount that should have been paid.
If you still fail to deposit within 10 days of receiving an IRS notice, the penalty can reach as high as 15 percent. This makes timely deposits critical for businesses with employees.

Interest Charges

The IRS charges interest on unpaid taxes and penalties added to your account starting from the return's original due date.
Interest rates change quarterly, and the balance compounds daily, which means the total amount owed grows faster the longer the tax remains unpaid.
Interest continues to accrue until the entire balance is fully paid, even if you are on a payment plan or not collectible.

Example of Penalties and Interest

Consider a business with a total tax liability of $5,000 for the 2020 tax year that failed to file or pay on time:

The late filing penalty could grow to as much as $1,250.
The late payment penalty could add another $1,250 to the balance.
Interest charges might total $1,000 to $1,500 over four years, depending on quarterly IRS rates.

In this situation, the original $5,000 in unpaid tax could grow to $8,500 or more once penalties and interest are fully assessed, showing how quickly the debt can escalate.

Understanding the Trust Fund Recovery Penalty (TFRP)

In addition to standard penalties, employers with unpaid taxes may face the Trust Fund Recovery Penalty. This penalty applies to certain employment taxes withheld from employees, such as federal income taxes, social security, and Medicare contributions. Because these amounts are considered held in trust for the government, failing to remit them is taken very seriously.

What Are Trust Fund Taxes?

Trust fund taxes include the federal income taxes withheld from employee paychecks.
These taxes also include the employee’s share of social security and Medicare contributions.
Employers are required by law to hold these amounts in trust and remit them to the IRS on time.

Who Can Be Held Liable?

Business owners and partners can be personally liable if they control financial decisions.
Corporate officers or directors may also be held responsible if they had the authority to decide which bills to pay.
Bookkeepers or accountants with check-signing authority can be considered responsible persons under the law.
Any individual who could control payments and failed to ensure taxes were remitted may be assessed a penalty.

Penalty Amount

The Trust Fund Recovery Penalty equals 100 percent of the trust fund taxes that were not paid.
For example, if $3,000 in withheld employee taxes were not submitted to the IRS, the responsible person could be assessed personally for the full $3,000.
This penalty is separate from others and is considered one of the most severe actions the IRS can take.

Defending Against TFRP

You may request an appeal within 60 days if you receive a notice proposing the penalty.
You can argue that you were not responsible or did not act willfully in failing to pay the taxes.
You may also defend against the penalty by showing that another party has already paid the tax.
Providing documentation promptly and responding within the required timeframe is critical for protecting your rights.

Resolution Options for Small Employers

The IRS offers several resolution programs if you cannot fully pay the tax owed on your 2020 Form 944. These options help small businesses address unpaid tax liabilities in good faith and avoid more decisive enforcement actions.

Installment Agreements (Payment Plans)

A short-term payment plan allows you to pay your balance in full within 120 days if the tax due is less than $100,000. Although no setup fee applies, interest and penalties continue until the debt is fully paid.
A long-term installment agreement lets you make monthly payments, often over 72 months, for balances under $50,000. While setup fees apply, the agreement prevents further collection activity as long as you stay current.
A streamlined installment agreement is available to small businesses with lower balances and usually does not require detailed financial statements, making it easier to set up quickly.

Penalty Relief Options

First-Time Abatement may be granted if you have filed all tax returns required for the past three years without significant issues, and the IRS may waive penalties for the 2020 tax year if you meet these compliance conditions.
Reasonable cause relief is possible if you can show that circumstances beyond your control, such as natural disasters, serious illness, or incorrect IRS advice, caused the late filing or payment, and documentation is required to support your claim.

Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full tax liability, and the IRS reviews your income, expenses, assets, and overall ability to pay before approving such an offer.
You may qualify if paying the full amount would create economic hardship or if there is doubt the IRS can collect the total tax due. However, an application fee and partial payment are usually required unless you qualify as low-income.

Currently Not Collectible (CNC) Status

CNC status can be granted if you show that paying your tax debt would leave you unable to cover necessary living expenses, and the IRS will suspend active collection actions in this situation.
While in CNC, penalties and interest continue to accrue on the unpaid balance, and the IRS will periodically review your account to determine if your financial situation has improved.

Real-World Case Examples

The IRS works with many small employers who file their Form 944 late or fail to file altogether. These examples illustrate how businesses can resolve issues with unpaid tax.

A restaurant owner missed the 2020 filing due date because of COVID-19 disruptions. Still, once she received an IRS notice, she filed immediately, requested First-Time Abatement, and saved nearly $1,000 in penalties while paying the remaining balance through a short-term plan.
A childcare provider filed her 2020 Form 944 three years late due to family medical emergencies. By providing hospital records as proof of reasonable cause, she reduced her late filing penalty by over $400.
A construction business used withheld payroll taxes for operating expenses during the pandemic and failed to file Form 944. After the IRS began assessing the Trust Fund Recovery Penalty, the owner filed late, negotiated an Offer in Compromise to reduce the balance, and set up a personal installment agreement for the trust fund portion.

These cases show that employers who act quickly, provide complete documentation, and demonstrate good faith can often reduce penalties and resolve unpaid tax issues.

Action Plan: What to Do Next

Taking action quickly is the most effective way to address an unfiled 2020 Form 944. The longer you wait, the more penalties and interest the IRS will assess on your account.

Immediate Actions (Within 1–2 Weeks)

To ensure you are using the correct version for the tax year, download the 2020 Form 944 and instructions from the IRS website or request them by mail.
Collect payroll records, W-2 forms, and deposit receipts from 2020 so you can calculate your total tax liability accurately.
Calculate your balance, including penalties and interest, to understand how much you owe.
File your return as soon as possible, even if you cannot pay the full tax due immediately, since filing reduces further failure-to-file penalties.

Short-Term Actions (Within 30 Days)

Pay as much as you can toward your balance to reduce late payment penalty charges and limit future interest.
Request penalty relief if you qualify for First-Time Abatement or can show reasonable cause for filing late, and include supporting documentation.
If you cannot pay the tax owed in full, you can apply for an installment agreement, which allows you to spread payments over time.

Long-Term Actions (Within 90 Days)

Stay current on all tax returns required to avoid repeat issues and additional penalties in future tax years.
Put systems in place, such as payroll software or professional accounting services, to ensure you file your return on time each year.
Monitor IRS notices and respond promptly. Ignoring letters can lead to enforcement actions such as liens, levies, or the Trust Fund Recovery Penalty.

By following this plan, you can address unpaid tax, limit penalties, and demonstrate good faith compliance with IRS requirements.

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

If you fail to file your return for the 2020 tax year by the original due date, the IRS will assess penalties and interest. The late filing penalty is 5 percent of the tax owed each month, with a maximum penalty of 25 percent. If the return is more than 60 days late, the minimum penalty is the lesser of $485 or 100 percent of the unpaid tax.

How does the IRS calculate a late payment penalty?

The IRS applies a late payment penalty of 0.5 percent of the unpaid balance every month or part of a month after the due date. This penalty can grow to a maximum penalty of 25 percent of the total tax liability. If you enter an installment agreement in good faith, the rate may be reduced to 0.25 percent per month until the account is fully paid.

Can penalties and interest make my tax liability much higher?

Yes, penalties and interest charges can quickly increase the amount you owe in taxes. In addition to the failure to file penalty and late payment penalty, interest compounds daily on the unpaid tax and assessed penalties. For example, a $5,000 tax liability from the 2020 tax year could grow to $8,500 if you pay late and the balance is not addressed promptly.

What if I cannot pay the tax due in full?

If you cannot pay the tax owed in full when you file a return, the IRS allows you to request resolution options. You may apply for an installment agreement to spread payments, or request penalty relief if reasonable cause applies. While interest charges and other penalties may still accrue, taking action shows good faith and can prevent the IRS from issuing more serious enforcement notices.

Can I request relief from IRS penalties?

Yes, businesses may request a waiver of specific penalties if they qualify. First-Time Abatement is available if tax returns required in prior years were filed correctly. You may also claim relief for reasonable cause if circumstances such as illness, natural disaster, or incorrect IRS instructions led to failure to file or pay late. Always provide complete details and additional information to support your request for relief.

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

What is Form 944, and Who Must File It

Who must file Form 944?

Who cannot file Form 944?

How to File or Correct an Unfiled 2020 Form 944

Step 1: Obtain the Correct Form and Instructions

Step 2: Gather Required Documentation

Step 3: Complete the Form Accurately

Step 4: Address Late Filing

Step 5: Choose Your Filing Method

IRS Penalties and Interest for Late or Unfiled Form 944

Late Filing Penalty

Late Payment Penalty

Deposit Penalties

Interest Charges

Example of Penalties and Interest

Understanding the Trust Fund Recovery Penalty (TFRP)

What Are Trust Fund Taxes?

Who Can Be Held Liable?

Penalty Amount

Defending Against TFRP

Resolution Options for Small Employers

Installment Agreements (Payment Plans)

Penalty Relief Options

Offer in Compromise (OIC)

Currently Not Collectible (CNC) Status

Real-World Case Examples

Action Plan: What to Do Next

Immediate Actions (Within 1–2 Weeks)

Short-Term Actions (Within 30 Days)

Long-Term Actions (Within 90 Days)

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

How does the IRS calculate a late payment penalty?

Can penalties and interest make my tax liability much higher?

What if I cannot pay the tax due in full?

Can I request relief from IRS penalties?

Frequently Asked Questions

Related Articles

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

What is Form 944, and Who Must File It

Who must file Form 944?

Who cannot file Form 944?

How to File or Correct an Unfiled 2020 Form 944

Step 1: Obtain the Correct Form and Instructions

Step 2: Gather Required Documentation

Step 3: Complete the Form Accurately

Step 4: Address Late Filing

Step 5: Choose Your Filing Method

IRS Penalties and Interest for Late or Unfiled Form 944

Late Filing Penalty

Late Payment Penalty

Deposit Penalties

Interest Charges

Example of Penalties and Interest

Understanding the Trust Fund Recovery Penalty (TFRP)

What Are Trust Fund Taxes?

Who Can Be Held Liable?

Penalty Amount

Defending Against TFRP

Resolution Options for Small Employers

Installment Agreements (Payment Plans)

Penalty Relief Options

Offer in Compromise (OIC)

Currently Not Collectible (CNC) Status

Real-World Case Examples

Action Plan: What to Do Next

Immediate Actions (Within 1–2 Weeks)

Short-Term Actions (Within 30 Days)

Long-Term Actions (Within 90 Days)

Frequently Asked Questions

What happens if I file the unfiled 2020 Form 944 late?

How does the IRS calculate a late payment penalty?

Can penalties and interest make my tax liability much higher?

What if I cannot pay the tax due in full?

Can I request relief from IRS penalties?

Frequently Asked Questions

Unfiled Returns by Year & Form Type

Unfiled 2020 Form 944: How to File, Penalties, and Relief Options

What is Form 944, and Who Must File It