Instructions For Form Ct-1 (2009) - Internal Revenue Service (Page 4 of 7) in pdf

The last day of the calendar year ends the

semiweekly schedule depositor for the rest of 2010 and

semiweekly deposit period and begins a new one.

for 2011.

CAUTION

Example of when $100,000 Next-Day Deposit Rule

does not apply. Employer G, a semiweekly schedule

Deposits on Banking Days Only

depositor, accumulated taxes of $95,000 on a Tuesday (of a

If a deposit is required to be made on a day that is a

Saturday-through-Tuesday deposit period) and accumulated

nonbanking day, it is considered timely if it is made by the

$10,000 on Wednesday (of a Wednesday-through-Friday

close of the next banking day. In addition to federal and

deposit period). Because the $10,000 was accumulated in a

state bank holidays, Saturdays and Sundays are treated as

deposit period different from the one in which the $95,000

nonbanking days. For example, if a deposit is required to be

was accumulated, the $100,000 Next-Day Deposit Rule

made on Friday and Friday is a nonbanking day, the deposit

does not apply. Thus, G must deposit $95,000 by Friday

will be considered timely if it is made by the following

and $10,000 by the following Wednesday.

Monday (if Monday is a banking day).

How To Make Deposits

Semiweekly schedule depositors will always have at least

In general, you must deposit railroad retirement taxes with

3 banking days to make a deposit. If any of the 3 weekdays

an authorized financial institution.

after the end of a semiweekly period is a nonbanking day,

Electronic deposit requirement. You must make

you have 1 additional day to deposit. For example, if you

electronic deposits of all depository taxes (such as

have Form CT-1 taxes accumulated for payments made on

employment tax, excise tax, and corporate income tax)

Friday and the following Monday is a nonbanking day, the

using the Electronic Federal Tax Payment System (EFTPS)

deposit normally due on Wednesday may be made on

in 2010 if:

Thursday (allowing 3 banking days to make the deposit).

•

The total of deposits of such taxes in 2008 was more than

Exceptions to the Deposit Rules

$200,000 or

•

You were required to use EFTPS in 2009.

The two exceptions that apply to the above deposit rules are

the:

If you are required to use EFTPS and use Form 8109

•

$2,500 Rule, and

(see below) instead, you may be subject to a 10% penalty. If

•

$100,000 Next-Day Deposit Rule.

you are not required to use EFTPS, you may participate

voluntarily. To enroll in or get more information about

$2,500 Rule. If your total Form CT-1 taxes for the year are

EFTPS, visit the EFTPS website at or call

less than $2,500 and the taxes are fully paid with a timely

1-800-555-4477.

filed Form CT-1, no deposits are required. However, if you

are unsure that you will accumulate less than $2,500,

Depositing on time. For deposits made by EFTPS to

deposit under the appropriate deposit rules so that you will

be on time, you must initiate the transaction at least 1

not be subject to deposit penalties.

business day before the date the deposit is due.

$100,000 Next-Day Deposit Rule. If you accumulate taxes

Use of Form 8109. If you are not making electronic

of $100,000 or more on any day during a deposit period, you

deposits (explained above), use Form 8109, Federal Tax

must deposit the taxes by the next banking day regardless

Deposit Coupon, with each deposit to indicate the type of

of whether you are a monthly or semiweekly schedule

tax deposited. To avoid a possible penalty, use an

depositor.

authorized financial institution; do not mail your deposit to

the IRS. Records of your deposits will be sent to the IRS for

If you are a monthly schedule depositor and you

crediting to your business accounts.

accumulate $100,000 or more on any one day during the

Accuracy of Deposits Rule. You are required to deposit

month, you become a semiweekly schedule depositor on the

100% of your railroad retirement taxes on or before the

next day for the remainder of the calendar year and for the

deposit due date. However, penalties will not be applied for

following year.

depositing less than 100% if both of the following conditions

Once a semiweekly schedule depositor accumulates

are met:

$100,000 or more in a deposit period, it must stop

1. Any deposit shortfall does not exceed the greater of

accumulating at the end of that day and begin to accumulate

$100 or 2% of the amount of taxes otherwise required to be

anew on the next day. The following example explains this

deposited, and

rule.

2. The deposit shortfall is paid or deposited by the

Example of $100,000 Next-Day Deposit Rule.

shortfall makeup date for each type of depositor as

Employer E is a semiweekly schedule depositor. On

described below.

Monday, E accumulates taxes of $110,000 and must deposit

•

Monthly schedule depositor. Deposit the shortfall or

this amount by Tuesday, the next banking day. On Tuesday,

pay it with your return by the due date of Form CT-1. You

E accumulates additional taxes of $30,000. Because the

may pay the shortfall with Form CT-1 even if the amount is

$30,000 is not added to the previous $110,000, E must

$2,500 or more.

deposit the $30,000 by Friday using the semiweekly deposit

•

Semiweekly schedule depositor. Deposit the shortfall

schedule.

by the earlier of the first Wednesday or Friday that comes on

Example of $100,000 Next-Day Deposit Rule during

or after the 15th of the month following the month in which

the first year of business. Employer F started its business

the shortfall occurred or the due date of Form CT-1. For

on January 29, 2010. Because this was the first year of its

example, if a semiweekly schedule depositor has a deposit

business, its Form CT-1 taxes for its lookback period (2008)

shortfall during January 2010, the shortfall makeup date is

are considered to be zero, and F is a monthly schedule

February 17, 2010 (Wednesday).

depositor. On February 1, F paid compensation for the first

time and accumulated taxes of $40,000. On February 5, F

Penalties and Interest

paid compensation and accumulated taxes of $60,000,

bringing its total accumulated (undeposited) taxes to

The law provides penalties for failure to file a return, late

$100,000. Because F accumulated $100,000 or more on

filing of a return, late payment of taxes, failure to make

February 5 (Friday), F must deposit the $100,000 by

deposits, or late deposits unless reasonable cause is

February 8 (Monday), the next banking day. F became a

shown. Interest is charged on taxes paid late at the rate set

semiweekly schedule depositor on February 6. F will be a

by law. For more information, see Pub. 15 (Circular E).

-4-

Instructions for Form CT-1 (2009)

Instructions For Form Ct-1 (2009) - Internal Revenue Service Page 4

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