Publication 80
taxmap/pubs/p80-008.htm#en_us_publink1000233961You must deposit social security and Medicare taxes if your tax liability (Form 941-SS, line 10; Form 944-SS, line 7; or Form 943, line 9) is $2,500 or more for the tax return period. You must make the deposit by electronic funds transfer. For more information about electronic funds transfers, see
How To Deposit, later in this section.
Instead of making deposits during the current quarter, you can pay your total Form 941-SS tax liability when you timely file Form 941-SS if:
- Your total Form 941 tax liability for either the current quarter or the preceding quarter is less than $2,500
and
- You do not incur a $100,000 next-day deposit obligation during the current
quarter.
If you are not sure your total liability for the current quarter will be less than $2,500, (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit
penalties.
Employers who have been notified to file Form 944-SS can pay their tax liability due for the fourth quarter with Form 944-SS, if their fourth quarter tax liability is less than $2,500. Employers must have deposited any tax liability due for the first, second, and third quarters, according to the deposit rules, in order to avoid failure-to-deposit penalties for deposits due during those
quarters.
 | Only monthly schedule depositors are allowed to make an Accuracy of Deposits Rule payment with the return. Semiweekly schedule depositors must timely deposit the amount. See
Accuracy of Deposits Rule and
How To Deposit, later in this section. |
taxmap/pubs/p80-008.htm#en_us_publink1000233964Under the rules discussed below, the only difference between farm and nonfarm workers' employment tax deposit rules is the lookback period. Therefore, farm and nonfarm workers are discussed together except where
noted.
Depending on your total taxes reported during a lookback period (discussed below), you are either a monthly schedule depositor or a semiweekly schedule
depositor.
The terms "monthly schedule depositor" and "semiweekly schedule depositor" do not refer to how often you pay your employees or how often you are required to make deposits. The terms identify which set of rules that you must follow when a tax liability arises (for example, when you have a
payday).
You will need to determine your deposit schedule for a calendar year based on the total employment taxes reported on Form 941-SS, line 10 (line 8 for quarters ending before January 1, 2011); Form 944-SS, line 7; Form 943, line 9; for your lookback period (defined below). If you filed both Forms 941-SS and 941 during the lookback period, combine the tax liabilities for these returns for purposes of determining your deposit schedule. Determine your deposit schedule for Form 943 separately from Forms 941-SS and
941.
taxmap/pubs/p80-008.htm#en_us_publink1000233965The lookback period for Form 941-SS (or Form 941) consists of four quarters beginning July 1 of the second preceding year and ending June 30 of the prior year. These four quarters are your lookback period even if you did not report any taxes for any of the quarters. For 2012, the lookback period is July 1, 2010, through June 30, 2011.
taxmap/pubs/p80-008.htm#en_us_publink1000233966taxmap/pubs/p80-008.htm#TXMP62621d3d
lookback
The lookback period for Form 944-SS (or Form 944) is the second calendar year
preceding the current calendar year. For example, the lookback period for
calendar year 2012 is calendar year 2010. In addition, for employers who filed
Form 944-SS (or Form 944) for 2010 or 2011 and will file Form 941-SS (or Form
941) for 2012, the lookback period for 2012 is the second calendar year
preceding the current calendar year, that is, 2010.
taxmap/pubs/p80-008.htm#en_us_publink1000233967The lookback period for Form 943 is the second calendar year preceding the current calendar year. The lookback period for calendar year 2012 is calendar year 2010.
taxmap/pubs/p80-008.htm#en_us_publink1000233968To determine your taxes for the lookback period, use only the tax that you reported on the original returns (Forms 941-SS, 944-SS, or Form 943). Do not include any adjustments shown on Form 941-X, Form 944-X, or Form 943-X.
taxmap/pubs/p80-008.htm#en_us_publink1000233969An employer originally reported total taxes of $45,000 for the lookback period. The employer discovered during January 2012 that the tax reported during the lookback period was understated by $10,000 and corrected this error by filing Form 941-X. The employer is a monthly schedule depositor for 2012 because the lookback period tax liabilities are based on the amounts originally reported, and they were $50,000 or less.
taxmap/pubs/p80-008.htm#en_us_publink1000233970The term "deposit period" refers to the period during which tax liabilities are accumulated for each required deposit due date. For monthly schedule depositors, the deposit period is a calendar month. The deposit periods for semiweekly schedule depositors are Wednesday through Friday and Saturday through
Tuesday.
taxmap/pubs/p80-008.htm#en_us_publink1000233971If your total tax reported for the lookback period is $50,000 or less, you are a monthly schedule depositor for the current year. You must deposit taxes on wage payments made during a calendar month by the 15th day of the following
month.
taxmap/pubs/p80-008.htm#en_us_publink1000233972Your tax liability for any quarter in the lookback period before the date you started or acquired your business is considered to be zero. Therefore, you are a monthly schedule depositor for the first calendar year of your business (but see the
$100,000 Next-Day Deposit Rule, later in this section).
If your total tax reported for the lookback period is more than $50,000, you are a semiweekly schedule depositor for the current year. If you are a semiweekly schedule depositor, you must deposit on Wednesday and/or Friday, depending on what day of the week that you make wage payments, as follows.
- Deposit taxes on wage payments made on Wednesday, Thursday, and/or Friday by the following
Wednesday.
- Deposit taxes on wage payments made on Saturday, Sunday, Monday, and/or Tuesday by the following
Friday.
Semiweekly depositors are generally not required to deposit twice a week if their payments were in the same semiweekly period unless the
$100,000 Next-Day Deposit Rule, discussed later in this section, applies. For example, if you made a payment on both Wednesday and Friday and incurred taxes of $10,000 for each pay date, deposit the $20,000 on the following Wednesday. If you made no additional payments on Saturday through Tuesday, no deposit is due on
Friday.
If you have more than one pay date during a semiweekly period and the pay dates fall in different calendar quarters, you will need to make separate deposits for the separate
liabilities.
taxmap/pubs/p80-008.htm#en_us_publink1000233975If you have a pay date on Saturday, March 31, 2012 (first quarter), and another pay date on Sunday, April 1, 2012 (second quarter), two separate deposits will be required even though the pay dates fall within the same semiweekly period. Both deposits will be due on Friday, April 6, 2012 (3 business days from the end of the semiweekly deposit
period).
taxmap/pubs/p80-008.htm#en_us_publink1000233976taxmap/pubs/p80-008.htm#en_us_publink1000233977Rose Co. reported Form 941-SS taxes as follows:
| 2011 Lookback Period |
|---|
| 3rd Quarter 2009 | $12,000 |
| 4th Quarter 2009 | 12,000 |
| 1st Quarter 2010 | 12,000 |
| 2nd Quarter 2010 | 12,000 |
| | $48,000 |
| 2012 Lookback Period |
|---|
| 3rd Quarter 2010 | $12,000 |
| 4th Quarter 2010 | 12,000 |
| 1st Quarter 2011 | 12,000 |
| 2nd Quarter 2011 | 15,000 |
| | $51,000 |
Rose Co. is a monthly schedule depositor for 2011 because its taxes for the four quarters in its lookback period ($48,000 for the 3rd quarter of 2009 through the 2nd quarter of 2010) were not more than $50,000. However, for 2012, Rose Co. is a semiweekly schedule depositor because the total taxes for the four quarters in its lookback period ($51,000 for the 3rd quarter of 2010 through the 2nd quarter of 2011) exceeded
$50,000.
Red Co. reported taxes on its 2010 Form 943 (line 9) of $48,000. On its 2011 Form 943 (line 9), it reported taxes of
$60,000.
Red Co. is a monthly schedule depositor for 2012 because its taxes for its lookback period ($48,000 for calendar year 2010) were not more than $50,000. However, for 2013, Red Co. is a semiweekly schedule depositor because the total taxes for its lookback period ($60,000 for calendar year 2011) exceeded
$50,000.
taxmap/pubs/p80-008.htm#en_us_publink1000233981New agricultural employers filing Form 943 are monthly schedule depositors for the first and second calendar years of their business because their taxes for the lookback period (2 years) are considered to be zero. However, see the
$100,000 Next-Day Deposit Rule, later in this section.
If a deposit due date falls on a day that is not a business day, the deposit is considered timely if it is made by the close of the next business day. A business day is any day other than a Saturday, Sunday, or legal holiday. For example, if a deposit is required to be made on Friday, but Friday is a legal holiday, the deposit is considered timely if it is made by the following Monday (if Monday is a business
day).
taxmap/pubs/p80-008.htm#en_us_publink1000255045The term "legal holiday" means any legal holiday in the District of Columbia. Legal holidays for 2012 are listed below.
- January 2—New Year's Day (observed)
- January 16—Birthday of Martin Luther King, Jr.
- February 20—Washington's Birthday
- April 16—District of Columbia Emancipation Day
- May 28—Memorial Day
- July 4—Independence Day
- September 3—Labor Day
- October 8—Columbus Day
- November 12—Veterans Day (observed)
- November 22—Thanksgiving Day
- December 25—Christmas Day
The examples below illustrate the procedure for determining the deposit date under the two different deposit
schedules.
taxmap/pubs/p80-008.htm#en_us_publink1000233984Spruce Co. is a monthly schedule depositor with seasonal employees. It paid wages each Friday during January but did not pay any wages during February. Under the monthly deposit schedule, Spruce Co. must deposit the combined tax liabilities for the four January paydays by February 15. Spruce Co. does not have a deposit requirement for February (due by March 15) because no wages were paid and, therefore, it did not have a tax liability for
February.
taxmap/pubs/p80-008.htm#en_us_publink1000233985Green, Inc. is a semiweekly schedule depositor and pays wages once each month on the last Friday of the month. Although Green, Inc., has a semiweekly deposit schedule, it will deposit just once a month because it pays wages only once a month. The deposit, however, will be made under the semiweekly deposit schedule as follows: Green, Inc.’s tax liability for the April 27, 2012 (Friday), payday must be deposited by May 2, 2012 (Wednesday). Under the semiweekly deposit schedule, liabilities for wages paid on Wednesday through Friday must be deposited by the following
Wednesday.
taxmap/pubs/p80-008.htm#en_us_publink1000233986If you accumulate taxes of $100,000 or more on any day during a deposit period, you must deposit by the close of the next business day, whether you are a monthly or a semiweekly schedule
depositor.
For purposes of the $100,000 rule, do not continue accumulating taxes after the end of a deposit period. For example, if a semiweekly schedule depositor has accumulated taxes of $95,000 on Tuesday and $10,000 on Wednesday, the $100,000 next-day deposit rule does not apply because the $10,000 is accumulated in the next deposit period. Thus, $95,000 must be deposited by Friday and $10,000 must be deposited by the
following
Wednesday.
However, 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 example, Fir Co. is a semiweekly schedule depositor. On Monday, Fir Co. accumulates taxes of $110,000 and must deposit on Tuesday, the next business day. On Tuesday, Fir Co. accumulates additional taxes of $30,000. Because the $30,000 is not added to the previous $110,000 and is less than $100,000, Fir Co. does not have to deposit the $30,000 until Friday (following the normal
semiweekly
deposit schedule).
| If you are a monthly schedule depositor and you accumulate a $100,000 tax liability on any day during a month, you become a semiweekly schedule depositor on the next day and remain so for the remainder of the calendar year and for the following calendar
year. |
taxmap/pubs/p80-008.htm#en_us_publink1000233988Elm, Inc. started its business on May 1, 2012. On May 4, it paid wages for the first time and accumulated a tax liability of $40,000. On Friday, May 11, Elm, Inc. paid wages and accumulated a liability of $60,000, making its accumulated Form 941-SS tax liability total $100,000. Elm, Inc. must deposit $100,000 by Monday, May 14, the next business day. Because this was the first year of its business, the tax liability for its lookback period is considered to be zero, and it would be a monthly schedule depositor based on the lookback rules. However, because Elm, Inc. accumulated $100,000 on May 11, it became a semiweekly schedule depositor on May 12. It will be a semiweekly schedule depositor for the remainder of 2012 and for
2013.
taxmap/pubs/p80-008.htm#en_us_publink1000233989You are required to deposit 100% of your tax liability on or before the deposit due date. However, penalties will not be applied for depositing less than 100% if both of the following conditions are met.
- Any deposit shortfall does not exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited,
and
- The deposit shortfall is paid or deposited by the shortfall makeup date as described
below.
Makeup date for deposit shortfall:
- Monthly schedule depositor.
Deposit or pay the shortfall by the due date of the Form 941-SS, 944-SS, or Form
943 for the period in which the shortfall occurred. You may pay the shortfall
with your return even if the amount is $2,500 or more.
- Semiweekly schedule depositor. Deposit by the earlier of:
- The first Wednesday or Friday (whichever comes first) that comes on or after the 15th of the month following the month in which the shortfall occurred,
or
- The return due date for the period in which the shortfall
occurred.
For example, if a semiweekly schedule depositor filing Form 941-SS has deposit shortfall during July 2012, the shortfall makeup date is August 15, 2012 (Wednesday). However, if the shortfall occurred on the required April 6 (Friday), deposit date for a March 31 (Saturday) pay date, the return due date for the March 31 pay date (April 30) would come before the May 16 (Wednesday) shortfall makeup date. In this case, the shortfall must be deposited by April 30, 2012.
taxmap/pubs/p80-008.htm#en_us_publink1000233990If you employ both farm and nonfarm workers, you must treat employment taxes for the farmworkers (Form 943 taxes) separately from employment taxes for the nonfarm workers (Form 941-SS or Form 944-SS taxes). Form 943 taxes and Form 941-SS (or Form 944-SS) taxes are not combined for purposes of applying any of the deposit
rules.
If a deposit is due, deposit the Form 941-SS (or Form 944-SS) taxes and Form 943 taxes separately, as discussed
below.
taxmap/pubs/p80-008.htm#en_us_publink1000233991You must deposit employment taxes by electronic funds transfer. See
Payment with Return, earlier in this section, for exceptions explaining when taxes may be paid with the tax return instead of being
deposited.
You must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your
behalf.
If you are required to make deposits and fail to do so, you may be subject to a penalty equal to 10% of the required deposit. EFTPS is a free service provided by the Department of the Treasury. To get more information or to enroll in EFTPS, call 1-800-555-4477 toll free (U.S. Virgin Islands only) or 303-967-5916 (toll call). You can also visit the EFTPS website at
www.eftps.gov. Additional information about EFTPS is also available in Publication
966.
If you are a new employer that indicated a federal tax obligation when requesting an EIN, you will be pre-enrolled in EFTPS. You will receive information about Express Enrollment in your
Employer Identification Number (EIN) Package
and an additional mailing containing your EFTPS personal identification number
(PIN) and instructions for activating your PIN. Follow the steps in your "How to
Activate Your Enrollment" brochure to activate your enrollment and begin making
your payroll tax deposits. Be sure to tell your payroll provider about your
EFTPS enrollment.
taxmap/pubs/p80-008.htm#en_us_publink1000233995For your records, an Electronic Funds Transfer (EFT) Trace Number will be provided with each successful payment. The number can be used as a receipt or to trace the
payment.
taxmap/pubs/p80-008.htm#en_us_publink1000233994For deposits made by EFTPS to be on time, you must initiate the deposit by 8 p.m. Eastern time the day before the date the deposit is due. If you use a third party to make deposits on your behalf, they may have different cutoff
times.
taxmap/pubs/p80-008.htm#en_us_publink1000254164If you fail to initiate a deposit transaction on EFTPS by 8 p.m. Eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA). If you ever need the same-day payment method, you will need to make arrangements with your financial institution ahead of time. Please check with your financial institution regarding availability, deadlines, and costs. Your financial institution may charge you a fee for payments made this way. To learn more about the information you will need to provide your financial institution to make a same-day wire payment, please visit
www.eftps.gov to download the
Same-Day Payment Worksheet.
If you deposited more than the right amount of taxes for a tax period, you can choose on Form 941-SS, Form 941, Form 944-SS, Form 944, or Form 943 for that tax period to have the overpayment refunded or applied as a credit to your next return. Do not ask EFTPS to request a refund from the IRS for
you.
taxmap/pubs/p80-008.htm#en_us_publink1000234004Penalties may apply if you do not make required deposits on time or if you make deposits of less than the required amount. The penalties do not apply if any failure to make a proper and timely deposit was due to reasonable cause and not to willful neglect. The IRS may also waive penalties if you inadvertently fail to deposit in the first quarter that a deposit is due, or the first quarter during which your frequency of deposits changed, if you timely filed your employment tax
return.
For amounts not properly or timely deposited, the penalty rates are as follows.
| 2%
| - | Deposits made 1 to 5 days late. |
| 5%
| - | Deposits made 6 to 15 days late. |
| 10%
| - | Deposits made 16 or more days late. Also applies to amounts paid within 10 days of the date of the first notice that the IRS sent asking for the tax due.
|
| 10%
| - | Deposits paid directly to the IRS or paid with your tax return (but see
Payment with Return, earlier in this section, for exceptions).
|
| 15%
| - | Amounts still unpaid more than 10 days after the date of the first notice that the IRS sent asking for the tax due or the day on which you received notice and demand for immediate payment, whichever is earlier.
|
Late deposit penalty amounts are determined using calendar days, starting from the due date of the
liability.
taxmap/pubs/p80-008.htm#en_us_publink1000234006
If you filed Form 944-SS for the prior year and must file Forms 941-SS for the
current year because your employment tax liability for the prior year exceeded
the Form 944-SS eligibility requirement ($1,000 or less), the failure-to-deposit
penalty will not apply to a late deposit of employment taxes for the first month
of the current year if the taxes are deposited in full by March 15 of the
current year.
taxmap/pubs/p80-008.htm#en_us_publink1000234007Deposits generally are applied to the most recent tax liability within the return period (quarter or year). However, if you receive a failure-to-deposit penalty notice, you may designate how your payment is to be applied in order to minimize the amount of the penalty, if you do so within 90 days of the date of the notice. Follow the instructions on the penalty notice that you received. For more information on designating deposits, see Rev. Proc. 2001-58. You can find Rev. Proc. 2001-58 on page 579 of Internal Revenue Bulletin 2001-50 at
www.irs.gov/pub/irs-irbs/irb01-50.pdf.
Cedar, Inc. is required to make a deposit of $1,000 on June 15 and $1,500 on July 15. It does not make the deposit on June 15. On July 15, Cedar, Inc. deposits $2,000. Under the deposits rule, which applies deposits to the most recent tax liability, $1,500 of the deposit is applied to the July 15 deposit and the remaining $500 is applied to the June deposit. Accordingly, $500 of the June 15 liability remains undeposited. The penalty on this underdeposit will apply as explained
above.
taxmap/pubs/p80-008.htm#en_us_publink1000234009If federal income, social security, and Medicare taxes that must be withheld are not withheld or are not deposited or paid to the United States Treasury, the trust fund recovery penalty may apply. The penalty is the full amount of the unpaid trust fund tax. This penalty 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 who are determined by the IRS to be responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing
so.
A
responsible person
can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship, or any other person or entity that is responsible for collecting, accounting for, and paying over trust fund taxes. A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business
funds.
Willfully
means voluntarily, consciously, and intentionally. A responsible person acts willfully if the person knows the required actions are not taking
place.
taxmap/pubs/p80-008.htm#en_us_publink1000234010The IRS may assess an "averaged" failure-to-deposit (FTD) penalty of 2% to 10% if you are a monthly schedule depositor and did not properly complete Form 941-SS, line 16, when your tax liability shown on Form 941-SS, line 10, was $2,500 or more. IRS may also assess this penalty of 2% to 10% if you are a semiweekly schedule depositor and your tax liability shown on Form 941-SS, line 10, was $2,500 or more and you did any of the following.
- Completed Form 941-SS, line 16, instead of Schedule B (Form
941).
- Failed to attach a properly completed Schedule B (Form 941).
- Completed Schedule B (Form 941) incorrectly, for example, by entering tax deposits instead of tax liabilities in the numbered
spaces.
The IRS figures the penalty by allocating your total tax liability shown on Form 941-SS, line 10, equally throughout the tax period. Your deposits and payments may not be counted as timely because IRS does not know the actual dates of your tax
liabilities.
You can avoid the penalty by reviewing your return before filing it. Follow these steps before filing your
Form 941-SS.
- If you are a monthly schedule depositor, report your tax liabilities (not your deposits) in the monthly entry spaces on Form 941-SS, line
16.
- If you are a semiweekly schedule depositor, report your tax liabilities (not your deposits) on Schedule B (Form 941) in the lines that represent the dates you paid your
employees.
- Verify that your total liability shown on Form 941-SS, line 16, or the bottom of Schedule B (Form 941) equals your tax liability shown on Form 941-SS,
line 10. - Do not show negative amounts on Form 941-SS, line 16, or Schedule B (Form
941).
- For prior period errors,
do not
adjust your tax liabilities reported on Form 941-SS, line 16, or on Schedule B
(Form 941). Instead, file an adjusted return (Form 941-X or 944-X) if you are
also adjusting your tax liability. If you are only adjusting your deposits in
response to a failure-to-deposit penalty notice, see the Instructions for
Schedule B (Form 941) or the Form 945-X instructions (for Form 944-SS).
| If you filed Form 944-SS for 2011 and line 7 was $2,500 or more, you were required to complete Form 944-SS, lines 13a–13m, or attach Form 945-A, Annual Record of Federal Tax Liability. If you failed to complete lines 13a–13m, or failed to attach Form 945-A, whichever was required, IRS may assess an "averaged" failure-to-deposit (FTD)
penalty. |
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