The IRS has issued a memorandum that outlines relief available for taxpayers unable to comply with the electronic tax deposit requirements for taxes and thus are subject to a potential penalty of 10% of such taxes under IRC §6656. In SBSE-04-0615-0045 the IRS has provided guidance to its employees regarding reasonable cause penalty relief for taxpayers unable to obtain a bank account in time to make the deposit.
The memorandum notes:
It has come to the Service's attention that there are unbanked taxpayers who, after undertaking reasonable efforts to obtain a bank account, are unable to do so and are unable to make other arrangements for depositing their taxes through the EFTPS. The penalty for not depositing electronically through the EFTPS is 10% of the amount deposited (the "failure to deposit penalty"). This failure to deposit penalty is not applicable if the taxpayer demonstrates that the failure to deposit electronically was due to reasonable cause and not due to willful neglect.
The memorandum specifically holds that:
For unbanked taxpayers who are timely in meeting their tax deposit obligations, the Service will not impose or will abate the failure to deposit penalty if a taxpayer can show they made reasonable efforts but were unable to get a bank account during the period at issue. To request penalty relief under this guidance, the unbanked taxpayer must include a signed statement that explains the taxpayer’s attempt to get a bank account and must include any corroborating documentation (denied account applications, correspondence from banks, etc.). The signed statement does not have to be in a particular format.
However this relief is not absolute—the memorandum notes that a taxpayer who can obtain an account but simply doesn’t want to do so can’t obtain relief under this provision. The memorandum notes:
This guidance does not apply to situations in which the taxpayer can obtain a bank account, but chooses not to maintain a bank account. Such cases will continue to be handled on a case by case basis.