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The last day of the calendar year ends the

business, its Form CT-1 taxes for its lookback period (2006)

semiweekly deposit period and begins a new one.

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

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

CAUTION

time and accumulated taxes of $40,000. On February 8, F

Example. Employer D, a semiweekly schedule depositor,

paid compensation and accumulated taxes of $60,000,

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

bringing its total accumulated (undeposited) taxes to

is a semiweekly schedule depositor, D will deposit just once

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

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

February 8 (Friday), F must deposit the $100,000 by

deposit, however, will be made under the semiweekly

February 11 (Monday), the next banking day. F became a

deposit schedule as follows: D’s taxes for the January 26,

semiweekly schedule depositor on February 9. F will be a

2008 (Saturday), payday must be deposited by February 1,

semiweekly schedule depositor for the rest of 2008 and

2008 (Friday). Under the semiweekly deposit rule, taxes

for 2009.

arising on Saturday through Tuesday must be deposited by

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

the following Friday.

does not apply. Employer G, a semiweekly schedule

Deposits on Banking Days Only

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

Saturday-through-Tuesday deposit period) and accumulated

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

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

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

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

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

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

state bank holidays, Saturdays and Sundays are treated as

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

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

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

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

and $10,000 by the following Wednesday.

will be considered timely if it is made by the following

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,

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

Electronic deposit requirement. You must make

have Form CT-1 taxes accumulated for payments made on

electronic deposits of all depository taxes (such as

Friday and the following Monday is a nonbanking day, the

employment tax, excise tax, and corporate income tax)

deposit normally due on Wednesday may be made on

using the Electronic Federal Tax Payment System (EFTPS)

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

in 2008 if:

•

The total of deposits of such taxes in 2006 was more than

Exceptions to the Deposit Rules

$200,000 or

•

The two exceptions that apply to the above deposit rules are

You were required to use RRBLINK/EFTPS in 2007.

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

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

voluntarily. To enroll in or get more information about

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

EFTPS, visit the EFTPS website at or call

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

1-800-555-4477.

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

If you are a monthly schedule depositor and you

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

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

crediting to your business accounts.

month, you become a semiweekly schedule depositor on the

Accuracy of Deposits Rule. You are required to deposit

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

100% of your railroad retirement taxes on or before the

following year.

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

Once a semiweekly schedule depositor accumulates

depositing less than 100% if both of the following conditions

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

are met:

accumulating at the end of that day and begin to accumulate

1. Any deposit shortfall does not exceed the greater of

anew on the next day. The following example explains this

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

rule.

deposited, and

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

2. The deposit shortfall is paid or deposited by the

Employer E is a semiweekly schedule depositor. On

shortfall makeup date for each type of depositor as

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

described below.

•

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

Monthly schedule depositor. Deposit the shortfall or

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

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

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

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

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

$2,500 or more.

•

schedule.

Semiweekly schedule depositor. Deposit the shortfall

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

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

the first year of business. Employer F started its business

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

on January 31, 2008. Because this was the first year of its

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

-4-

Instructions For Form Ct-1 - Employer'S Annual Railroad Retirement Tax Return - Internal Revenue Service - 2007 Page 4

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