Failure to pay taxes on a 2006 distribution

[Guest sugar daddy]

A terminated, now deceased, participant had an account balance of $3650.48. She was paid $2920.30, however the 20% with holding ($730.18) was never deposited and remains in the plan despite numerous letters telling them it needs to be paid. What's the penalty for failure to pay tax withholding timely? I think it increases as it goes unpaid.

[Lou S.]

I think the penalties section of circular E http://www.irs.gov/publications/p15/ar02.h...blink1000202484 may be helpful.

I believe the penalty is 10% or 15% (depending on whether or not the client has been notified by the IRS) plus interest for the time the deposit should have been made.