Publication 80 - (Circular Ss),federal Tax Guide For Employers In The U.s. Virgin Islands, Guam, American Samoa, And The Commonwealth Of The Northern Mariana Islands Page 10
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24Employers of farmworkers. Red Co. reported taxes on
$100,000 Next-Day Deposit Rule
its 2002 Form 943 (line 9) of $48,000. On its 2003 Form
If you accumulate taxes of $100,000 or more on any day
943 (line 9), it reported taxes of $60,000.
during a deposit period, you must deposit by the close of
Red Co. is a monthly schedule depositor for 2004 be-
the next banking day, whether you are a monthly or a
cause its taxes for its lookback period ($48,000 for calen-
semiweekly schedule depositor.
dar year 2002) were not more than $50,000. However, for
For purposes of the $100,000 rule, do not continue
2005, Red Co. is a semiweekly schedule depositor be-
accumulating taxes after the end of a deposit period. For
cause the total taxes for its lookback period ($60,000 for
example, if a semiweekly schedule depositor has accumu-
calendar year 2003) exceeded $50,000.
lated taxes of $95,000 on Tuesday and $10,000 on
New agricultural employers. New agricultural employ-
Wednesday, the $100,000 next-day deposit rule does not
ers filing Form 943 are monthly schedule depositors for the
apply because the $10,000 is accumulated in the next
first and second calendar years of their business because
deposit period. Thus, $95,000 must be deposited by Friday
taxes for the lookback period (2 years) are considered to
and $10,000 must be deposited by the following Wednes-
be zero. However, see the $100,000 Next-Day Deposit
day.
Rule below.
In addition, once you accumulate at least $100,000 in a
deposit period, stop accumulating at the end of that day
and begin to accumulate anew on the next day. For exam-
Deposits on Banking Days Only
ple, Fir Co. is a semiweekly schedule depositor. On Mon-
day, Fir Co. accumulates taxes of $110,000 and must
If a deposit due date falls on a day that is not a banking
deposit on Tuesday, the next banking day. On Tuesday,
day, the deposit is considered timely if it is made by the
Fir Co. accumulates additional taxes of $30,000. Because
close of the next banking day. In addition to federal and
the $30,000 is not added to the previous $110,000 and is
state bank holidays, Saturdays and Sundays are treated
less than $100,000, Fir Co. does not have to deposit the
as nonbanking days. For example, if a deposit is required
$30,000 until Friday (following the normal semiweekly de-
to be made on Friday, but Friday is not a banking day, the
posit schedule).
deposit is considered timely if it is made by the following
Monday (if Monday is a banking day).
If you are a monthly schedule depositor and you
!
Semiweekly schedule depositors will always have at
accumulate a $100,000 tax liability on any day
least 3 banking days to make a deposit. That is, if any of
during a month, you become a semiweekly
CAUTION
the 3 weekdays after the end of a semiweekly period is a
schedule depositor on the next day and remain so for the
banking holiday, you will have 1 additional banking day to
remainder of the calendar year and for the following calen-
deposit. For example, if a semiweekly schedule depositor
dar year.
accumulated taxes for payments made on Friday and the
Example of $100,000 next-day deposit rule. Elm, Inc.
following Monday is not a banking day, the deposit nor-
started business on May 2, 2005. Because Elm, Inc. is a
mally due on Wednesday may be made on Thursday
new employer, the taxes for its lookback period are consid-
(allowing 1 banking day to make the deposit).
ered to be zero; therefore, Elm, Inc. is a monthly schedule
depositor. On May 13, Elm, Inc. paid wages for the first
time and accumulated taxes of $60,000. On May 20 (Fri-
Application of Monthly and Semiweekly
day), Elm, Inc. paid wages and accumulated taxes of
Schedules
$50,000, for a total of $110,000. Because Elm, Inc. accu-
mulated $110,000 on May 20, it must deposit $110,000 by
The examples below illustrate the procedure for determin-
May 23 (Monday), the next banking day.
ing the deposit date under the two different deposit sched-
ules.
Accuracy of Deposits Rule
Monthly schedule example. Green, Inc. is a seasonal
employer and a monthly schedule depositor. It pays wages
You are required to deposit 100% of your tax liability on or
each Friday. During January 2005, it paid wages but did
before the deposit due date. However, penalties will not be
not pay any wages during February. Green, Inc. must
applied for depositing less than 100% if both of the follow-
deposit the combined tax liabilities for the January paydays
ing conditions are met.
by February 15. Green, Inc. does not have a deposit
requirement for February (that is, due by March 15) be-
1. Any deposit shortfall does not exceed the greater of
cause no wages were paid in February and, therefore, it
$100 or 2% of the amount of taxes otherwise re-
did not have a tax liability for February.
quired to be deposited.
2. The deposit shortfall is paid or deposited by the
Semiweekly schedule example. Blue Co., a semiweekly
shortfall makeup date as described below.
schedule depositor, pays wages on the last day of the
month. Blue Co. will deposit only once a month because it
Makeup date for deposit shortfall:
pays wages only once a month, but the deposit will be
made under the semiweekly deposit schedule as follows.
1. Monthly schedule depositor. Deposit or pay the
Blue Co.’s tax liability for the April 29, 2005 (Friday) payday
shortfall by the due date of the Form 941-SS (or
must be deposited by May 4, 2005 (Wednesday).
Form 943) for the period in which the shortfall oc-
Page 10
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