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(due by April 15) because no wages were paid and,

Once a semiweekly schedule depositor accumulates

therefore, C does not have a tax liability for the month.

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

accumulating at the end of that day and begin to accumulate

Semiweekly Schedule Depositor

anew on the next day. The following example explains this

If you are a semiweekly schedule depositor, use the table

rule.

below to determine when to make deposits.

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

Employer E is a semiweekly schedule depositor. On

Deposit Tier I and Tier II taxes

No later than...

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

for payments made on...

this amount by Tuesday, the next business day. On

Tuesday, E accumulates additional taxes of $30,000.

Wednesday, Thursday, and/or

The following Wednesday

Because the $30,000 is not added to the previous $110,000,

Friday

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

deposit schedule.

Saturday, Sunday, Monday,

The following Friday

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

and/or Tuesday

the first year of business. Employer F started its business

on January 28, 2011. Because this was the first year of its

Example. Employer D, a semiweekly schedule depositor,

business, its Form CT-1 taxes for its lookback period (2009)

pays wages on the last Saturday of each month. Although D

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

is a semiweekly schedule depositor, D will deposit just once

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

a month because D pays wages only once a month. The

time and accumulated taxes of $40,000. On February 4, F

deposit, however, will be made under the semiweekly

paid compensation and accumulated taxes of $60,000,

deposit schedule as follows: D’s taxes for the January 29,

bringing its total accumulated (undeposited) taxes to

2011 (Saturday), payday must be deposited by February 4,

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

2011 (Friday). Under the semiweekly deposit rule, taxes

February 4 (Friday), F must deposit the $100,000 by

arising on Saturday through Tuesday must be deposited by

February 7 (Monday), the next business day. F became a

the following Friday.

semiweekly schedule depositor on February 5. F will be a

semiweekly schedule depositor for the rest of 2011 and

The last day of the calendar year ends the

for 2012.

semiweekly deposit period and begins a new one.

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

CAUTION

does not apply. Employer G, a semiweekly schedule

Deposits on Business 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

Saturday, Sunday or legal holiday, it is considered timely if it

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

is made by the close of the next business day. Business

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

days include every day other than Saturday, Sunday, or

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

legal holidays under section 7503. For example, if a deposit

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

is required to be made on Friday and Friday is a legal

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

holiday, the deposit will be considered timely if it is made by

and $10,000 by the following Wednesday.

the following Monday (if Monday is a business day).

Electronic Deposit Requirement

Semiweekly schedule depositors will always have at least

The IRS has issued proposed regulations under section

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

6302 which provide that beginning January 1, 2011, you

after the end of a semiweekly period is a legal holiday, you

must deposit all depository taxes (such as employment tax,

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

excise tax, and corporate income tax) electronically using

Form CT-1 taxes accumulated for payments made on Friday

the Electronic Federal Tax Payment Systems (EFTPS).

and the following Monday is a legal holiday, the deposit

Under these proposed regulations, which are expected to be

normally due on Wednesday may be made on Thursday

finalized by December 31, 2010, Forms 8109 and 8109-B,

(allowing 3 business days to make the deposit).

Federal Tax Deposit Coupon, cannot be used after

Exceptions to the Deposit Rules

December 31, 2010. For more information about EFTPS or

to enroll in EFTPS, visit the EFTPS website at

The two exceptions that apply to the above deposit rules are

gov

or call 1-800-555-4477. You can also get Pub. 966, The

the:

Secure Way to Pay Your Federal Taxes.

•

$2,500 Rule, and

•

Depositing on time. For deposits made by EFTPS to be

$100,000 Next-Day Deposit Rule.

on time, you must initiate the deposit by 8 PM Eastern time

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

the day before the date the deposit is due. If you use a third

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

party to make deposits on your behalf, they may have

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

different cutoff times.

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

Accuracy of Deposits Rule. You are required to deposit

deposit under the appropriate deposit rules so that you will

100% of your railroad retirement taxes on or before the

not be subject to deposit penalties.

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

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

depositing less than 100% if both of the following conditions

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

are met:

must deposit the taxes by the next business day regardless

1. Any deposit shortfall does not exceed the greater of

of whether you are a monthly or semiweekly schedule

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

depositor.

deposited, and

If you are a monthly schedule depositor and you

2. The deposit shortfall is paid or deposited by the

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

shortfall makeup date for each type of depositor as

month, you become a semiweekly schedule depositor on the

described below.

•

Monthly schedule depositor. Deposit the shortfall or

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

following year.

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

-4-

Instructions for Form CT-1 (2010)

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2010 Page 4

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