To pay deferred Social Security taxes from the CARES Act, pull your exact deferral figure from your 2020 Form 941 or Schedule SE, then send the money electronically through EFTPS (employers) or IRS Direct Pay (self-employed), coded to the 2020 tax period so it lands against the deferral balance rather than a current-year liability. Both installment deadlines — December 31, 2021, and December 31, 2022 — are now behind us, so any outstanding balance is accruing failure-to-deposit penalties and daily-compounding interest. Speed matters, and so does routing the payment correctly.
Confirm the Exact Amount You Owe
Estimates cause problems. If what you send doesn’t match what the IRS has on your account, you can end up with a lingering balance and more notices even after you thought you paid.
If You Had Payroll
Pull your Form 941 filings for the second, third, and fourth quarters of 2020. Line 13b on that year’s version of the form is labeled “Deferred amount of social security tax” and shows what you postponed each quarter. Add the Line 13b figures across the applicable quarters. If you later filed a Form 941-X to amend any of those returns, work those adjustments into the total.
If You Were Self-Employed
Your deferral was calculated on Part III of the 2020 Schedule SE, “Maximum Deferral of Self-Employment Tax Payments,” which you attached to your 2020 Form 1040. Part III isolates the portion of net self-employment earnings from March 27 through December 31, 2020, and applies the 6.2% employer-equivalent rate. The result carried to Schedule 3 (Form 1040), line 12e. That’s the number to repay.
Watch for Employee Retention Credit Overlap
Employers who also claimed the Employee Retention Credit on their 2020 Form 941 should be cautious. Credits reduced the overall deposit obligation, which could change the amount actually deferred, and any Form 941-X filed later to claim or adjust the ERC may have shifted the Social Security tax balance on your account. Confirm your current balance with the IRS before paying based only on your original Line 13b figures.
How to Send the Payment
Whatever method you use, the payment has to be applied to your 2020 deferral balance. A misrouted payment gets credited to the wrong period, and the deferral stays open on the IRS’s books even though the money left your account.
EFTPS for Employers
The Electronic Federal Tax Payment System is the IRS’s preferred channel for repaying deferred employment taxes. Log in and select “Deferred Social Security Tax” as the payment type rather than making a routine payroll deposit, and set the tax period to the 2020 deferral window. EFTPS generates a confirmation number that acts as your receipt. Depositing the funds as a regular payroll tax payment by mistake is the most common way a repayment gets credited to the wrong period.
IRS Direct Pay for Self-Employed Individuals
Self-employed filers can use IRS Direct Pay at irs.gov to move funds straight from a bank account, no pre-registration required. Select “Balance Due” as the reason and choose the 1040 return type for the 2020 tax year. Applying it to 2020 is what ties the payment to your deferral. You get a confirmation number as soon as the transaction processes.
Check or Money Order
Paper works too. Make the check or money order payable to “United States Treasury” and write your name, address, daytime phone number, EIN or SSN, the tax year the payment covers, and the related tax form number on it. Employers should enclose Form 941-V (Payment Voucher) so the IRS routes it correctly. Mail to the address in the instructions for the applicable form. Paper takes longer to post, and while penalties keep running you’re better off with an electronic payment.
What Late Payment Costs
Missing an installment deadline is more serious than a penalty on the late slice. IRS guidance provides that failing to deposit by the applicable due date can invalidate the deferral for the entire deferred amount, not just the installment you missed. The failure-to-deposit penalty under Section 6656 can then apply to the full original deferral.
The penalty rate scales with how late the deposit is:
- Up to 5 days late: 2% of the underpayment.
- 6 to 15 days late: 5% of the underpayment.
- More than 15 days late: 10% of the underpayment.
- After an IRS delinquency notice: 15% if you don’t pay within 10 days of the first notice demanding payment.
Because both deadlines are now years past, most remaining balances have long since crossed the 15-day threshold. On a $50,000 total deferral where the first installment was missed, the 10% penalty could apply to the whole $50,000 rather than just the $25,000 that came due, which is $5,000 in penalties before interest.
The IRS also charges interest on unpaid balances, compounded daily. The underpayment interest rate for the first quarter of 2026 is 7%. Interest has been running from the original due dates, so a balance outstanding since December 2021 has accumulated substantially. Every day of delay adds to the total.
Unresolved accounts move into the IRS’s standard collection process, which can include federal tax liens, bank levies, and wage garnishment. If you haven’t yet received a collection notice, that isn’t necessarily good news; some accounts still need manual adjustment before they enter the collection pipeline.
If You Can’t Pay the Whole Balance
There are ways to resolve the debt short of waiting for enforced collection.
Installment Agreement
Businesses that owe $25,000 or less in combined tax, penalties, and interest and have filed all required returns can set up a monthly payment plan through the IRS Online Payment Agreement tool. The setup fee is $22 with automatic bank withdrawals (required once the balance exceeds $10,000) or $69 for manual monthly payments. Sole proprietors and independent contractors apply as individuals, not businesses. Penalties and interest keep accruing until the balance is cleared, but an active agreement keeps the account out of enforced collection. If you owe more than $25,000, contact the IRS directly using the number on your most recent notice to negotiate an arrangement.
Penalty Relief for Reasonable Cause
The IRS may waive failure-to-deposit penalties if you can show reasonable cause, meaning you exercised ordinary care and were still unable to pay on time. Serious illness, natural disasters, and system failures that prevented timely payment can qualify. Not knowing about the deadline, relying on a tax professional who missed it, or simply lacking funds generally does not, although a genuine, documented effort to comply can factor in. Separate relief existed for employers whose deposit shortfall tied to anticipated refundable credits like the Employee Retention Credit.
To request relief, call the number on your penalty notice or respond in writing with documentation. Acting sooner reads as more credible than surfacing years later with no prior contact.
Keep Your Records
Hold onto your 2020 Form 941 filings or Schedule SE, any Form 941-X amendments, EFTPS confirmation numbers, and Direct Pay receipts until the IRS’s collection statute of limitations runs out. For assessed tax, the IRS generally has 10 years from the date of assessment to collect. Since penalties on these deferrals were assessed in 2022 and later, those records may stay relevant into the early 2030s. If the IRS ever questions whether you paid, the confirmation number is your proof.