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If you are a monthly schedule depositor, and you

Depositing on time. For deposits made by RRBLINK/

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

EFTPS to be on time, you must initiate the transaction at

month, you become a semiweekly schedule depositor for

least one business day before the date the deposit is due.

the remainder of the calendar year and for the following

Use of Form 8109. If you are not making electronic

year.

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

Once a semiweekly schedule depositor accumulates

Deposit Coupon, with each deposit to indicate the type of

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

tax deposited. To avoid a possible penalty, use an

accumulating at the end of that day and begin to accumulate

authorized financial institution; do not mail your deposit to

anew on the next day. The following example explains this

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

rule.

crediting to your business accounts.

Example of $100,000 next-day deposit rule. Employer

E is a semiweekly schedule depositor. On Monday, E

Accuracy of deposits rule. You are required to deposit

accumulates taxes of $110,000 and must deposit this

100% of your railroad retirement taxes on or before the

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

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

accumulates additional taxes of $30,000. Because the

depositing less than 100% if both of the following conditions

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

are met:

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

1. Any deposit shortfall does not exceed the greater of

schedule.

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

Example of $100,000 next-day deposit rule during the

deposited and

first year of business. Employer F started its business on

2. The deposit shortfall is paid or deposited by the

January 31, 2005. Because this was the first year of its

shortfall makeup date for each type of depositor as

business, its Form CT-1 taxes for its lookback period are

described below.

considered to be zero, and F is a monthly schedule

•

Monthly schedule depositor. Deposit the shortfall or

depositor. On February 4, F paid compensation for the first

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

time and accumulated taxes of $40,000. On February 11, F

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

paid compensation and accumulated taxes of $60,000,

$2,500 or more.

bringing its total accumulated (undeposited) taxes to

•

Semiweekly schedule depositor. Deposit the shortfall

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

by the earlier of the first Wednesday or Friday that comes

February 11 (Friday), F must deposit the $100,000 by

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

February 14 (Monday), the next banking day. F became a

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

semiweekly schedule depositor on February 14. F will be a

For example, if a semiweekly schedule depositor has a

semiweekly schedule depositor for the rest of 2005 and for

2006.

deposit shortfall during January 2005, the shortfall makeup

date is February 16, 2005 (Wednesday).

Example of when $100,000 next-day deposit rule does

not apply. Employer G, a semiweekly schedule depositor,

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

Penalties and Interest

Saturday-through-Tuesday deposit period) and accumulated

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

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

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

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

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

deposits, or late deposits unless reasonable cause is

was accumulated, the $100,000 next-day deposit rule does

shown. If you are unavoidably late in doing any of these,

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

send an explanation with Form CT-1. Interest is charged on

$10,000 by the following Wednesday.

taxes paid late at the rate set by law. For more information,

see Pub. 15 (Circular E).

How To Make Deposits

In general, you must deposit railroad retirement taxes with

Order in which deposits are applied. Generally, for

an authorized financial institution.

deposit periods beginning after December 31, 2001, tax

deposits are applied first to the most recent tax liability

Electronic deposit requirement. You must make

within the specified tax period to which the deposit relates. If

electronic deposits of all depository taxes (such as

you receive a failure to deposit penalty notice, you may

employment tax, excise tax, and corporate income tax)

designate how your payment is to be applied in order to

using RRBLINK or the Electronic Federal Tax Payment

minimize the amount of the penalty. You must respond

System (EFTPS) in 2005 if:

•

within 90 days of the date of the notice. Follow the

The total of deposits of such taxes in 2003 were more

instructions on the notice you received. See Rev. Proc.

than $200,000 or

•

2001-58, 2001-50 I.R.B. 579, for more information. You can

You were required to use RRBLINK/EFTPS in 2004.

find Rev. Proc. 2001-58 on page 579 of Internal Revenue

If you are required to use RRBLINK/EFTPS and use

Bulletin 2001-50 at

Form 8109 instead, you may be subject to a 10% penalty. If

you are not required to use RRBLINK/EFTPS, you may

Trust fund recovery penalty. If taxes that must be

participate voluntarily. To enroll in or get more information

withheld are not withheld or are not deposited or paid to the

about RRBLINK, call 1-888-273-2265. To enroll in or get

United States Treasury, the trust fund recovery penalty may

more information about EFTPS, call 1-800-555-4477 or

apply. The penalty is 100% of the unpaid taxes. This penalty

1-800-945-8400, or visit the EFTPS website at

may apply to you if these unpaid taxes cannot be

immediately collected from the employer or business. The

trust fund recovery penalty may be imposed on all persons

You can use RRBLINK to make your railroad

who are determined by the IRS to be responsible for

TIP

retirement payments and your federal tax payments.

collecting, accounting for, and paying over these taxes, and

If you are enrolled in RRBLINK and EFTPS, you may

who acted willfully in not doing so. For more information, see

be able to use RRBLINK for all your transactions. Contact

Pub. 15 (Circular E) .

RRBLINK at 1-888-273-2265 for more information.

-4-

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - 2004 Page 4

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