Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled Returns by Year & Form Type

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Heading

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Frequently Asked Questions

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Filing federal tax returns on time is a key responsibility for small business owners, yet deadlines are sometimes missed. One of the most overlooked filings is Form 945, the Annual Return of Withheld Federal Income Tax, which applies to nonpayroll payments such as pensions, retirement distributions, or gambling winnings. If your 2023 Form 945 remains unfiled, the Internal Revenue Service (IRS) considers your account delinquent, which may trigger penalties, interest charges, and collection notices.

An unfiled 2023 Form 945 increases the risk of owing more money due to penalties and complicates compliance moving forward. Many taxpayers are unaware of the differences between Form 945 and more common returns like Form 941, leading to confusion about due dates, required deposits, and payment obligations. Missing these deadlines can result in the most common penalties for small businesses, including failure to file and pay fines.

This guide provides a clear roadmap to help you resolve the issue. You will learn who must file Form 945, how to prepare and complete it accurately, where to file, and how to make payments. The article also covers IRS penalty relief options, payment plans, and real-world case studies to illustrate practical solutions. Whether you are trying to catch up on a missed tax return or seeking guidance on penalty abatement, this resource will help you take the proper steps toward compliance and peace of mind.

Understanding Form 945 and Its Requirements

Form 945, Annual Return of Withheld Federal Income Tax, reports federal income tax withheld from nonpayroll payments. These include pensions, annuities, military retirement, gambling winnings, and backup withholding. Unlike the quarterly Form 941, which focuses on payroll taxes, Form 945 is filed once a year and explicitly addresses income tax withheld from nonpayroll sources.

Key Differences Between Form 945 and Form 941

Form 941: Reports income tax, Social Security, and Medicare withheld from wages. It must be filed every quarter.
Form 945: Reports federal income tax withheld from nonpayroll payments only. It is filed annually.
Separate obligations: Filing Form 941 does not replace the requirement to file Form 945 if you have nonpayroll withholdings.

Who Must File Form 945

You must file a lawsuit if your business or organization withheld federal income tax from nonpayroll payments during the year. This requirement applies to:

Employers who make pension or retirement distributions are required to file if federal income tax was withheld.
Pension administrators handling qualified plans must also file under these rules.
Casinos or gaming establishments that pay gambling winnings are required to submit the necessary forms.
Federal, state, or local agencies that process certain government payments must comply with the filing requirement.
Any entity responsible for backup withholding on reportable payments is obligated to file as well.

2023 Due Dates and Implications

The due date for 2023 Form 945 was January 31, 2024. If all deposits were made on time and in full, the IRS granted an extension until February 10, 2024. Missing these deadlines means the return is now considered late. As a result, taxpayers may face failure to file penalties, failure to pay fines, and interest charges until the return and balance are settled.

Preparing to File an Unfiled 2023 Form 945

Gathering the proper documents and understanding where to find official resources are essential before you submit your return. Filing without proper records increases the risk of errors, which may cause additional penalties or delays with the Internal Revenue Service.

Documents and Records You Will Need

To complete your unfiled 2023 Form 945, collect the following:

Records of nonpayroll payments: Include pensions, annuities, military retirement benefits, or gambling winnings paid during 2023.
Federal income tax withholding details: Ensure amounts are correctly tracked for each payment type.
Deposit records: Keep copies of all payments you submitted through EFTPS or other methods.
Employer Identification Number (EIN): These are required to identify your business.
Information returns filed for 2023: The examples include Forms 1099-R, 1099-MISC, 1099-NEC, or W-2G.

Where to Obtain Form 945 and Instructions

Download the 2023 Form 945 at IRS.gov/Form945.
Access detailed instructions at IRS.gov/Instructions945.
You may also contact the IRS or visit a financial institution authorized to distribute federal forms.

Importance of Accuracy

Submitting a complete and accurate return is critical. Mistakes can trigger IRS notices, penalties, or interest charges on unpaid taxes. If you are unsure about your records or deductions, consider consulting a tax professional or attorney who can guide you on behalf of your business. Filing correctly the first time ensures compliance and reduces the likelihood of future issues.

Step-by-Step Instructions for Completing Form 945

Filing your unfiled 2023 Form 945 requires careful attention to detail. Each line corresponds to a specific part of your business’s tax obligations. Use the guide below to complete the form correctly and avoid the most common penalties.

1. Federal Income Tax Withheld (Line 1)

Enter the total federal income tax withheld from nonpayroll payments. This includes pensions, annuities, military retirement, gambling winnings, and voluntary withholding on government payments. Do not include backup withholding here.

2. Backup Withholding (Line 2)

Report the total amount of backup withholding collected during 2023. Backup withholding may apply to certain gambling winnings, payments reported on Form 1099, or payments where a taxpayer identification number was missing.

3. Total Taxes (Line 3)

Add the amounts from Line 1 and Line 2. This represents your total income tax liability for the year.

4. Total Deposits (Line 4)

Enter the total of all deposits you made throughout 2023 for Form 945. Include any overpayments applied from prior years.

5. Balance Due (Line 5)

Record the difference if your total taxes (Line 3) exceed your deposits (Line 4). This is the amount you still owe. You must submit this payment with your return to avoid further interest charges and penalties.

6. Overpayment (Line 6)

If deposits exceed total taxes, report the overpayment. You may request a refund or apply the excess to your next tax return.

7. Monthly Summary of Federal Tax Liability (Line 7)

Complete this section if you are a monthly depositor and your total liability is $2,500 or more. Report your liability by month to match your deposit schedule.

Common Mistakes to Avoid

Filing Form 941 instead of Form 945 for nonpayroll payments is a common mistake that can lead to processing issues.
Forgetting to sign the return before submission will cause the IRS to treat it as incomplete.
Using the wrong IRS address for mailing can delay processing, as the correct address varies by payment status and location.
Misreporting backup withholding amounts may result in notices, penalties, or the need to amend the return.

Tips for Accuracy

Double-check deposit records before entering totals.
Compare entries with information returns (such as 1099s) to ensure consistency.
Keep a copy of the completed form for your records and future IRS correspondence.

Filing Options: Electronic vs. Paper

Once your 2023 Form 945 is complete, you must decide how to file. The Internal Revenue Service accepts both electronic and paper filings. Choosing the right option depends on your resources and preferences.

Electronic Filing (Recommended)

Faster processing: Returns submitted electronically are processed more quickly than paper forms.
Lower error rate: IRS systems catch common mistakes before submission, reducing the chance of notices or rejected filings.
Convenient payment options: Taxpayers can submit payments through EFTPS, debit or credit card, or direct transfer from a financial institution.
How to file: Visit the IRS Employment Tax e-file page or use approved third-party software providers.

Paper Filing

Some businesses may still prefer or be required to file by mail. If you decide to use this option, please ensure your return is sent to the appropriate IRS address. The address depends on your location and whether a payment is included.

Without a payment:

Eastern states should mail to the Kansas City, MO Service Center.
Western states should mail to the Ogden, UT Service Center.

With a payment enclosed:

Eastern states should mail to the Cincinnati, OH Service Center.
Western states should mail to the Louisville, KY Service Center.

Choosing the Best Option

Electronic filing saves time and helps avoid mistakes, making it the best choice for most small businesses. However, paper filing may be suitable if you cannot use electronic systems or prefer mailing a physical return. Always confirm the correct IRS address before submission to prevent delays.

Making Payments on a Late Form 945

Please submit payment promptly if your unfiled 2023 Form 945 indicates a balance due. Paying quickly reduces additional interest charges and penalties on unpaid taxes. The IRS provides several secure payment options.

Payment Methods Available

Electronic Federal Tax Payment System (EFTPS): The most reliable option, allowing businesses to schedule payments online or by phone. Enrollment is free, but setup may take a few days.
Credit or debit card payments: Accepted through IRS-approved processors. Be aware that processing fees apply.
Direct bank transfer: Use IRS Direct Pay to pay directly from your financial institution account. No fees are charged.
Check or money order: Available for paper filings. Make checks payable to “United States Treasury” and include your EIN, tax year, and “Form 945” on the memo line.

Why Timely Payment Matters

Payments reduce the balance subject to penalties and interest.
Even partial payments help lower overall costs.
Prompt action shows good faith, which may support requests for penalty relief in certain circumstances.

If You Cannot Pay in Full

Submit the return anyway: Filing stops the larger failure-to-file penalty, even if you cannot pay.
Request a payment plan: The IRS offers short-term (up to 120 days) and long-term installment agreements to help taxpayers manage overdue amounts.
Contact the IRS directly: Businesses may qualify for alternative arrangements, such as settlement options or currently non-collectible status.

IRS Penalties and Interest for Late Form 945

When the 2023 Form 945 is not filed or paid on time, the Internal Revenue Service may impose multiple penalties. These costs add up quickly, especially when combined with daily interest charges. Understanding these rules helps taxpayers determine what they owe and how to minimize additional fees.

Failure to File Penalty

The IRS charges 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%.
A minimum penalty applies if your return is more than 60 days late.

Failure to Pay Penalty

The IRS charges 0.5% of the unpaid taxes each month or part of a month after the due date, capped at 25%.
When both penalties apply in the same month, the failure to file penalty is reduced by the failure to pay penalty.

Failure to Deposit Penalty

If deposits of withheld income tax were late or incomplete, the following rates apply:

2% for deposits made one to five days late
5% for deposits made six to fifteen days late
10% for deposits made sixteen or more days late
15% for amounts not deposited within ten days after the IRS sends a notice

Interest Charges

Interest applies to both unpaid taxes and penalties.
The Department of the Treasury sets interest rates each quarter.
Interest compounds daily until the full balance is paid.

Example of Combined Penalties

If a business owes $5,000 in income tax and files six months late without payment:

Failure to file a penalty equals $1,250 (25% of $5,000).
Failure to pay the penalty equals $150 (0.5% × 6 months × $5,000).
Total penalties before interest equal $1,400.

This example shows how quickly common penalties can grow when deadlines are missed.

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

The Trust Fund Recovery Penalty (TFRP) is one of the most serious actions the Internal Revenue Service can take. It applies when withheld taxes—such as federal income tax from employees or nonpayroll payments—are not paid to the government. The penalty equals 100% of the unpaid trust fund taxes, and responsibility can extend beyond the business to individuals with control over financial decisions.

Who Can Be Personally Liable

Corporate officers or directors who authorize payments can be held personally liable for unpaid trust fund taxes.
Partners in a partnership are responsible for ensuring tax compliance and may face liability if taxes are not remitted.
Sole proprietors who control business accounts and payments are personally accountable for any missed payments.
Payroll service providers or bookkeepers who have the authority to sign checks can also be held liable.
Any person with control over how funds are used may be personally responsible, especially if they choose to pay other bills instead of the IRS.

How the IRS Determines Responsibility and Willfulness

The person had the authority to sign checks or control the company account.
The individual determined which creditors were paid and when.
The person knew taxes were not being paid, but allowed other payments to take priority.
The IRS may review records, signatures, and financial practices to determine accountability.

Failing to handle withheld income taxes properly can put the business and responsible individuals at risk. Because this penalty can lead to personal liability, consulting a tax professional or attorney is strongly recommended if the TFRP may apply.

Resolution Options for IRS Debt

The IRS offers several resolution options if you cannot pay the full balance shown on your unfiled 2023 Form 945. These programs are designed to help taxpayers manage unpaid taxes while progressing toward compliance.

Payment Plans and Installment Agreements

Short-term payment plans (up to 120 days): These plans are available for balances of $100,000 or less. No setup fees apply. Payments can be made through EFTPS, bank transfer, or card.
Long-term installment agreements: Suitable for balances that cannot be cleared quickly. Setup fees range from $31 to $225, depending on payment method.
In-Business Trust Fund Express Installment Agreement: Simplified option for businesses that owe employment-related or nonpayroll taxes. It allows repayment over up to 24 months with reduced paperwork.

Penalty Abatement

First Time Abate (FTA): These provides penalty relief if you have a clean filing history for the past three years.
Reasonable cause relief: Granted if you can show that certain circumstances—such as illness, natural disaster, or reliance on incorrect professional advice—prevented timely filing or payment.
How to request: Call the IRS Business Line or submit Form 843 with documentation supporting your claim.

Offer in Compromise (OIC)

Purpose: Allows taxpayers to settle their debt for less than the full balance when full payment is unlikely.
Eligibility: Based on income, expenses, and ability to pay. The IRS will determine whether collecting the full balance is realistic.
Types of offers: Doubt as to collectibility, doubt as to liability, or effective tax administration.
Application process: Requires submitting Form 656, a financial disclosure (Form 433-A or 433-B), an application fee, and an initial payment.

Currently Not Collectible (CNC) Status

Definition: Temporary status granted when taxpayers cannot pay due to financial hardship.
Benefits: IRS collection actions are suspended, and no monthly payments are required while the status is in place.
Considerations: Interest and penalties continue to accrue, and the IRS may periodically review your financial account.
When to consider: If paying your tax debt would make you unable to cover basic living or business expenses.

These IRS offers provide structured ways to handle unpaid taxes. Choosing the right option depends on your balance, financial situation, and long-term business goals.

Real-World Case Studies

Examining real scenarios helps illustrate how the IRS applies penalties and what resolution strategies may succeed. The following examples show common issues with unfiled Form 945 returns and the outcomes when taxpayers took corrective action.

Case Study 1: Restaurant with Missed Filing

A small restaurant that distributed retirement benefits failed to submit its 2023 Form 945. The IRS assessed failure-to-file and failure-to-pay penalties, increasing the balance by 25% within several months. After filing the overdue return and requesting penalty relief through First Time Abate, the IRS removed the filing penalty, leaving only interest and a smaller payment obligation.

Case Study 2: Gaming Establishment with Backup Withholding

A gaming business withheld federal income tax on gambling winnings but did not file its 2023 Form 945. The IRS added failure-to-deposit penalties and pursued the Trust Fund Recovery Penalty against the owner. By filing promptly and submitting an offer in compromise, the business could settle for less than the original balance due, based on financial hardship.

Case Study 3: Pension Administrator with Multiple Unfiled Years

A pension administrator discovered three consecutive years of missed Form 945 filings totaling more than $40,000 in liability. The IRS assessed substantial penalties and interest. After filing all years together, the taxpayer requested reasonable cause relief and applied for Currently Not Collectible status. The IRS abated part of the penalties and granted temporary relief, later transitioning the account into a structured installment plan. These cases show how different industries face similar challenges with Form 945 and how available IRS programs—such as penalty abatement, OIC, and CNC status—can provide resolution options.

Taking Action: Your Next Steps

Filing an unfiled 2023 Form 945 may feel overwhelming, but following a structured process makes it manageable. Taking action quickly limits additional penalties, interest charges, and IRS notices while moving your account back into compliance.

Immediate Action Plan

Gather your records: Collect all nonpayroll payment details, withholding amounts, and deposit confirmations for 2023.
Download the correct form: Please access the official 2023 Form 945 and its instructions directly from the IRS website.
Complete the return: Carefully fill in each line, ensuring all amounts match your records. Double-check before submission.
File promptly: Submit the return electronically or mail it to the correct IRS address based on your location and whether payment is enclosed.
Make a payment: Please pay as much as possible as soon as possible to help reduce unpaid taxes and minimize penalties.
Contact the IRS if needed: If you cannot pay in full, request a payment plan or explore other available IRS offers.
Consult a tax professional: Professional guidance protects your rights and may increase your chances of penalty relief when penalties are high or circumstances are complex.

Taking these steps shows the IRS that you are making a reasonable faith effort to comply. Even if you cannot pay in full, filing the return prevents larger penalties from accruing and opens the door to resolution programs such as installment agreements or penalty abatement.

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

There is no statute of limitations on filing required returns, so you should submit Form 945 as soon as possible. The longer you wait, the more penalties and interest charges accumulate on unpaid taxes. Filing promptly reduces your overall balance and demonstrates to the Internal Revenue Service that you are taking compliance seriously.

Can I still e-file my return if it’s late?

The IRS accepts late returns through its electronic filing system and approved software providers. E-filing reduces errors, provides faster confirmation, and simplifies payment options. Ancient tax years may require mailing, but a 2023 Form 945 can still be filed electronically. Filing electronically also helps ensure your return reaches the IRS without postal delays.

What if I cannot pay the full amount owed right now?

You should file your return even if you cannot pay in full. Filing prevents the larger failure-to-file penalty from increasing your balance. The IRS offers payment plans and installment agreements that allow taxpayers to make monthly payments. Other options, such as penalty relief or settlement through an Offer in Compromise, may apply in certain circumstances.

Will filing a late Form 945 increase my audit risk?

Filing late does not automatically trigger an audit, but the IRS may review your account more closely. Submitting a complete, accurate return and paying as much as possible helps reduce risk. Keep organized records of payments and deposits. If you receive a notice, respond promptly. A tax professional can also represent you on your behalf during IRS interactions.

Can penalties be removed if I had a good reason for filing late?

Yes, the IRS may grant penalty relief if you qualify for First Time Abate or can demonstrate reasonable cause. Natural disasters, serious illness, or reliance on incorrect advice are acceptable reasons. Call the IRS Business Line or submit Form 843 with supporting documentation to request relief. Providing detailed records strengthens your request and improves the chances of success.

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Understanding Form 945 and Its Requirements

Key Differences Between Form 945 and Form 941

Who Must File Form 945

2023 Due Dates and Implications

Preparing to File an Unfiled 2023 Form 945

Documents and Records You Will Need

Where to Obtain Form 945 and Instructions

Importance of Accuracy

Step-by-Step Instructions for Completing Form 945

1. Federal Income Tax Withheld (Line 1)

2. Backup Withholding (Line 2)

3. Total Taxes (Line 3)

4. Total Deposits (Line 4)

5. Balance Due (Line 5)

6. Overpayment (Line 6)

7. Monthly Summary of Federal Tax Liability (Line 7)

Common Mistakes to Avoid

Tips for Accuracy

Filing Options: Electronic vs. Paper

Electronic Filing (Recommended)

Paper Filing

Choosing the Best Option

Making Payments on a Late Form 945

Payment Methods Available

Why Timely Payment Matters

If You Cannot Pay in Full

IRS Penalties and Interest for Late Form 945

Failure to File Penalty

Failure to Pay Penalty

Failure to Deposit Penalty

Interest Charges

Example of Combined Penalties

Trust Fund Recovery Penalty (TFRP): What Business Owners Need to Know

Who Can Be Personally Liable

How the IRS Determines Responsibility and Willfulness

Resolution Options for IRS Debt

Payment Plans and Installment Agreements

Penalty Abatement

Offer in Compromise (OIC)

Currently Not Collectible (CNC) Status

Real-World Case Studies

Case Study 1: Restaurant with Missed Filing

Case Study 2: Gaming Establishment with Backup Withholding

Case Study 3: Pension Administrator with Multiple Unfiled Years

Taking Action: Your Next Steps

Immediate Action Plan

Frequently Asked Questions (FAQ)

How long do I have to file my unfiled 2023 Form 945?

Can I still e-file my return if it’s late?

What if I cannot pay the full amount owed right now?

Will filing a late Form 945 increase my audit risk?

Can penalties be removed if I had a good reason for filing late?

Frequently Asked Questions

Related Articles

Unfiled 2023 Form 945: How to File, Penalties, and Relief Options

Understanding Form 945 and Its Requirements

Key Differences Between Form 945 and Form 941

Who Must File Form 945

2023 Due Dates and Implications

Preparing to File an Unfiled 2023 Form 945

Documents and Records You Will Need

Where to Obtain Form 945 and Instructions

Importance of Accuracy

Step-by-Step Instructions for Completing Form 945

1. Federal Income Tax Withheld (Line 1)

2. Backup Withholding (Line 2)

3. Total Taxes (Line 3)

4. Total Deposits (Line 4)

5. Balance Due (Line 5)

6. Overpayment (Line 6)

7. Monthly Summary of Federal Tax Liability (Line 7)

Common Mistakes to Avoid

Tips for Accuracy

Filing Options: Electronic vs. Paper

Electronic Filing (Recommended)

Paper Filing

Choosing the Best Option

Making Payments on a Late Form 945

Payment Methods Available