Payroll Tax Deposits
Beginning January 1, 2011, Federal tax deposits made by paper coupons (Form 8109) will no longer be processed. All taxpayers that currently use form 8109 coupons for their federal tax deposits will have to deposit their federal taxes through the Electronic Federal Tax Payment System (EFTPS) after the end of 2010. According to the Department of the Treasury, the new rule will apply to the payment of corporate income taxes, corporate estimated taxes, excise, and employment taxes, but not to the payment of estimated individual income tax payments. Failure to deposit correctly will result in a 10 percent penalty. If you have been using EFTPS, you must continue to do so.
If the Internal Revenue Service has not mailed you a notification of your deposit category (monthly or semi-weekly) prior to your first payroll for 2011, you must determine which of the two deposit categories you are required to use. This will be the category you use for every payroll tax deposit made in 2011 (excluding FUTA deposits). Your deposit category for a calendar year is determined from taxes reported on your Forms 941 (line 11) in a four-quarter lookback period. The lookback period begins July 1, 2009, and ends June 30, 2010. If you reported $50,000 or less in taxes for the lookback period, you are a monthly schedule depositor, if you reported more than $50,000, you are a semi-weekly schedule depositor.
Under the monthly deposit schedule, deposit taxes on payments are made during a month by the 15th day of the following month. Under the semi-weekly deposit schedule, deposit taxes within three banking days. If you do not know what deposit category your business falls into, please contact this office.
Additionally, this new EFTPS requirement does not change the existing rules that permit monthly schedule depositors paying a minimal amount of tax, $2,500 or less, to make their payments with the related tax return. For example, employers with $2,500 or less in
Quarterly payroll tax liability will still have the option to remit employment taxes with a timely filed quarterly or annual payroll tax return. However, if you are unsure that you will accumulate less than $2,500, deposit under the appropriate rules so that you will not be subject to a failure to deposit penalties.
If you accumulate a tax liability of $100,000 or more on any day, you must deposit the tax by the next banking day, whether you are a monthly or semi-weekly depositor.