Will the federal income tax withholding, FICA tax, and FUTA tax adjustments for increased wages be subject to interest-free adjustments under IRC Section 6205?
A.4 For income tax withholding and FICA tax adjustments, the answer is yes, but for FUTA tax adjustments, the answer is no. Federal income tax withholding and FICA tax adjustments will be treated as interest-free adjustments under IRC Section 6205. Under IRC Section 6205, federal income tax withholding and FICA tax liabilities may be satisfied without statutory interest if the additional tax is paid by the due date of the Form 941, Employer’s Quarterly Tax Return, for the period during which the error was ascertained. The error will be considered ascertained on the date the Form 906 Closing Agreement is signed. FUTA taxes and penalties are subject to the normal interest rules.
