IRS CP134B
Federal Tax Deposit Shortfall
Your payroll tax deposit was short — a penalty has been assessed.
Deadline
Respond within 60 days
Deposit the shortfall immediately to stop further penalty accrual. Then request penalty abatement within 60 days of the notice.
Respond promptly to protect your options and avoid escalation.
What IRS CP134B Means
CP134B is an employment tax notice issued when the IRS identifies a shortfall between the payroll taxes you were required to deposit and the amount actually deposited during a quarter. The IRS cross-references your Form 941 deposits with your filed return to identify discrepancies.
The failure-to-deposit (FTD) penalty under IRC §6656 is graduated by how late the deposit is: 2% for 1–5 days late, 5% for 6–15 days late, 10% for more than 15 days late, and 15% if the amount remains unpaid 10 days after an IRS notice. Shortfalls can result from incorrect deposit frequency, miscalculated payroll taxes, or administrative errors.
Employment tax compliance is an IRS enforcement priority. Repeated payroll deposit failures can lead to an IRS Revenue Officer being assigned to your account, a referral for Trust Fund Recovery Penalty (TFRP) investigation, or even personal liability for business owners and officers.
What the IRS Can Do If You Don't Respond
- Assess failure-to-deposit penalties at graduated rates up to 15%
- Assess Trust Fund Recovery Penalty (TFRP) against responsible individuals personally
- Issue a levy against business assets or personal accounts of responsible parties
- Assign a Revenue Officer to investigate and enforce employment tax compliance
- File a Notice of Federal Tax Lien
What You Should Do Right Now
- 1
Verify the shortfall amount by comparing CP134B to your 941 deposit records
- 2
Deposit the shortfall immediately using EFTPS to stop further penalty accrual
- 3
Review your deposit schedule — if your tax liability increased, you may have moved into a semiweekly deposit requirement
- 4
Request penalty abatement in writing if this is a first-time occurrence or there was a reasonable cause
- 5
Contact a CPA if you are unsure about your deposit obligations or have multiple quarters with shortfalls
Resolution Options Available to You
Frequently Asked Questions About IRS CP134B
How is the failure-to-deposit penalty calculated?
2% if 1–5 days late, 5% if 6–15 days late, 10% if more than 15 days late, and 15% if not paid within 10 days of a CP134B notice. The penalty is applied to the amount of the shortfall, not the total payroll tax.
What triggers a deposit shortfall?
Common causes: using the wrong deposit schedule (monthly vs. semiweekly), underwithheld payroll taxes, payroll software errors, or simply missing a deposit deadline. Review your 941 and compare to actual EFTPS deposits.
Can the IRS hold me personally responsible for payroll taxes?
Yes — the Trust Fund Recovery Penalty (TFRP) allows the IRS to assess the employee portion of withheld payroll taxes personally against owners, officers, and others responsible for ensuring deposits were made. This is one of the most serious business tax risks.
What is the difference between CP134B and CP161?
CP134B relates to a federal tax deposit shortfall on 941 payroll taxes. CP161 is a balance due notice for unpaid payroll tax as reflected on a filed 941 return. Both can escalate to the TFRP.
Professional References
IRC: IRC §6656 — Failure to Make Deposit; IRC §6672 — Trust Fund Recovery Penalty
IRM: IRM 20.1.4 — Failure to Deposit Penalty
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