Publication 80 - Circular Ss - Department Of The Treasury (Page 10 of 24) in pdf

of the three weekdays after the end of a semiweekly period

If you are a monthly schedule depositor and

is a banking holiday, you will have one additional banking

you accumulate a $100,000 tax liability on any

day during a month, you become a semiweekly

day to deposit. For example, if a semiweekly schedule

CAUTION

schedule depositor on the next day and remain so for the

depositor accumulated taxes for payments made on Friday

remainder of the calendar year and for the following calen-

and the following Monday is not a banking day, the deposit

dar year.

normally due on Wednesday may be made on Thursday

(allowing three banking days to make the deposit).

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

started business on May 3, 2004. Because Elm, Inc. is a

new employer, the taxes for its lookback period are consid-

Application of Monthly and Semiweekly

ered to be zero; therefore, Elm, Inc. is a monthly schedule

Schedules

depositor. On May 14, Elm, Inc. paid wages for the first

time and accumulated taxes of $60,000. On May 21 (Fri-

The examples below illustrate the procedure for determin-

day), Elm, Inc. paid wages and accumulated taxes of

ing the deposit date under the two different deposit sched-

$50,000, for a total of $110,000. Because Elm, Inc. accu-

ules.

mulated $110,000 on May 21, it must deposit $110,000 by

May 24 (Monday), the next banking day.

Monthly schedule example. Green, Inc. is a seasonal

employer and a monthly schedule depositor. It pays wages

each Friday. During January 2004, it paid wages but did

Accuracy of Deposits Rule

not pay any wages during February. Green, Inc. must

You are required to deposit 100% of your tax liability on or

deposit the combined tax liabilities for the January paydays

before the deposit due date. However, penalties will not be

by February 15. Green, Inc. does not have a deposit

applied for depositing less than 100% if both of the follow-

requirement for February (i.e., due by March 15) because

ing conditions are met:

no wages were paid in February and, therefore, it did not

have a tax liability for February.

1) Any deposit shortfall does not exceed the greater of

$100 or 2% of the amount of taxes otherwise re-

Semiweekly schedule example. Blue Co., a semiweekly

quired to be deposited and

schedule depositor, pays wages on the last day of the

month. Blue Co. will deposit only once a month because it

2) The deposit shortfall is paid or deposited by the

shortfall makeup date as described below.

pays wages only once a month, but the deposit will be

made under the semiweekly deposit schedule as follows.

Makeup date for deposit shortfall:

Blue Co.’s tax liability for the April 30, 2004 (Friday) payday

•

Monthly schedule depositor. Deposit or pay the

must be deposited by May 5, 2004 (Wednesday).

shortfall by the due date of the Form 941-SS (or

Form 943) for the period in which the shortfall oc-

$100,000 Next-Day Deposit Rule

curred. You may pay the shortfall with your return

even if the amount is $2,500 or more.

If you accumulate taxes of $100,000 or more on any day

•

Semiweekly schedule depositor. Deposit by the

during a deposit period, you must deposit by the close of

earlier of the: (a) first Wednesday or Friday (which-

the next banking day, whether you are a monthly or a

ever comes first) that comes on or after the 15th of

semiweekly schedule depositor.

the month following the month in which the shortfall

For purposes of the $100,000 rule, do not continue

occurred or (b) the return due date for the period in

accumulating taxes after the end of a deposit period. For

which the shortfall occurred.

example, if a semiweekly schedule depositor has accumu-

lated taxes of $95,000 on Tuesday and $10,000 on

For example, if a semiweekly schedule depositor has

Wednesday, the $100,000 next-day deposit rule does not

a deposit shortfall during February 2004, the shortfall

apply because the $10,000 is accumulated in the next

makeup date is March 17, 2004 (Wednesday). However, if

deposit period. Thus, $95,000 must be deposited by Friday

the shortfall occurred on the required April 7 (Wednesday)

and $10,000 must be deposited by the following Wednes-

deposit date for a March 31 (Wednesday) pay date, the

day.

return due date for the March 31 tax liability (April 30)

In addition, once you accumulate at least $100,000 in a

would come before the May 19 (Wednesday) shortfall

deposit period, stop accumulating at the end of that day

makeup date. In this case, the shortfall must be deposited

and begin to accumulate anew on the next day. For exam-

by April 30.

ple, Fir Co. is a semiweekly schedule depositor. On Mon-

day, Fir Co. accumulates taxes of $110,000 and must

deposit on Tuesday, the next banking day. On Tuesday,

Employers of Both Farm and Nonfarm

Fir Co. accumulates additional taxes of $30,000. Because

Workers

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

less than $100,000, Fir Co. must deposit the $30,000 by

If you employ both farm and nonfarm workers, you must

Friday (following the normal semiweekly deposit sched-

treat employment taxes for the farmworkers (Form 943

ule).

taxes) separately from employment taxes for the nonfarm

Page 10

Publication 80 - Circular Ss - Department Of The Treasury Page 10

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