Instructions For Form Ct-1 - 2016 (Page 5 of 8) in pdf

ahead of time. Please check with your financial institution

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

regarding availability, deadlines, and costs. Your financial

undeposited taxes of $100,000 or more on any day during a

institution may charge you a fee for payments made this way.

deposit period, you must deposit the taxes by the next

To learn more about the information you will need to provide

business day regardless of whether you’re a monthly or

your financial institution to make a same-day wire payment,

semiweekly schedule depositor.

visit

and click on Same-day wire.

If you’re a monthly schedule depositor and you

Accuracy of Deposits Rule. You’re required to deposit

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

100% of your railroad retirement taxes on or before the

you become a semiweekly schedule depositor on the next

deposit due date. However, penalties won't be applied for

day for the remainder of the calendar year and for the

depositing less than 100% if both of the following conditions

following year.

are met.

Once a semiweekly schedule depositor accumulates

1. Any deposit shortfall doesn't exceed the greater of

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

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

accumulating at the end of that day and begin to accumulate

deposited.

anew on the next day. The following examples explain this

rule.

2. The deposit shortfall is paid or deposited by the

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

shortfall makeup date for each type of depositor as described

Employer E is a semiweekly schedule depositor. On Monday,

below.

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

Monthly schedule depositor. Deposit the shortfall or pay

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

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

accumulates additional taxes of $30,000. Because the

pay the shortfall with Form CT-1 even if the amount is $2,500

$30,000 isn't added to the previous $110,000, E must

or more.

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

Semiweekly schedule depositor. Deposit the shortfall

schedule.

by the earlier of the first Wednesday or Friday on or after the

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

15th of the month following the month in which the shortfall

the first year of business. Employer F started its business

occurred. For example, if a semiweekly schedule depositor

on May 1, 2017. Because this was the first year of its

has a deposit shortfall during January 2017, the shortfall

business, its Form CT-1 taxes for its lookback period (2015)

makeup date is February 15, 2017 (Wednesday).

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

Penalties and Interest

depositor. On May 5, F paid compensation for the first time

and accumulated taxes of $40,000. On May 12, F paid

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

compensation and accumulated taxes of $60,000, bringing

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

its total accumulated (undeposited) taxes to $100,000.

and late deposits unless reasonable cause is shown. Interest

Because F accumulated $100,000 or more on May 12

is charged on taxes paid late at the rate set by law. For more

(Friday), F must deposit the $100,000 by May 15 (Monday),

information, see Pub. 15.

the next business day. F became a semiweekly schedule

If you receive a notice about a penalty after you file this

depositor on May 13. F will be a semiweekly schedule

return, reply to the notice with an explanation and we will

depositor for the rest of 2017 and for 2018.

determine if you meet reasonable-cause criteria. Don't attach

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

an explanation when you file your return.

doesn't apply. Employer G, a semiweekly schedule

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

Use Form 843 to request abatement of assessed

Saturday-through-Tuesday deposit period) and accumulated

penalties or interest. Don't request abatement of assessed

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

penalties or interest on Form CT-1 or Form CT-1 X.

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

Order in which deposits are applied. Generally, tax

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

deposits are applied first to the most recent tax liability within

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

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

doesn't apply. Thus, G must deposit $95,000 by Friday and

receive a failure-to-deposit penalty notice, you may

$10,000 by the following Wednesday.

designate how your payment is to be applied in order to

Electronic Deposit Requirement

minimize the amount of the penalty. You must respond within

90 days of the date of the notice. Follow the instructions on

You must use EFT to make all federal tax deposits.

the notice you received. See Rev. Proc. 2001-58 for more

Generally, an EFT is made using EFTPS. To get more

information. You can find Rev. Proc. 2001-58 on page 579 of

information about EFTPS or to enroll in EFTPS, visit the

Internal Revenue Bulletin 2001-50 at

EFTPS website at , or call 1-800-555-4477 or

irbs/irb01-50.pdf.

1-800-733-4829 (TDD). Additional information about EFTPS

is also available in Pub. 966.

Trust fund recovery penalty. If taxes that must be withheld

aren't withheld or aren't deposited or paid to the United

For an EFTPS deposit to be on time, you must

States Treasury, the trust fund recovery penalty may apply.

submit the deposit by 8 p.m. Eastern time the day

The penalty is 100% of the unpaid taxes. If these unpaid

before the date the deposit is due.

CAUTION

taxes can't be immediately collected from the employer or

business, the trust fund recovery penalty may be imposed on

Same-day wire payment option. If you fail to submit a

all persons who are determined by the IRS to be responsible

deposit transaction on EFTPS by 8 p.m. Eastern time the day

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

before the date a deposit is due, you can still make your

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

deposit on time by using the Federal Tax Collection Service

Trust fund recovery penalty in section 11 of Pub. 15.

(FTCS). To use the same-day wire payment method, you will

need to make arrangements with your financial institution

-5-

Instructions for Form CT-1 (2016)

Instructions For Form Ct-1 - 2016 Page 5

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