Guide to Global Payroll Management Failure to file electronically If a withholding agent is required to file Form 1042-S electronically but fails to do so, and has not received a hardship waiver, the penalty is $280 per return over 249. Late or partial deposit12 If a deposit is late or only part of the deposit is paid, a penalty is assessed on the amount of the underpayment unless the payer can show the failure to deposit in full and on time was due to reasonable cause and not willful neglect. The penalty is: * 2% of the underpayment if the deposit is made within 5 days of the due date * 5% of the underpayment if the deposit is made within 6-15 days of the due date * 10% of the underpayment if the deposit is made more than 15 days after the due date or is made by a method other than electronic funds transfer * 15% of the underpayment if the deposit is not made within 10 days after the IRS issues the first notice demanding payment 12. IRC ยง6656. 4-10