Page 218 - Essentials of Payroll: Management and Accounting

Payr oll Taxes and Remittances
until the next required remittance date.Depending upon the size of the
remittances, a company may periodically cut a check for the remittance
amount and deliver it to a local bank or Federal Reserve Bank that is
authorized to forward the funds to the IRS. However, companies with

larger remittances are required to make electronic funds transfers directly to
the IRS. If a company uses a payroll supplier, then this process is invis-
ible to the company, since the supplier will handle remittances.
Assuming that a company processes its own payroll, it must then
determine the frequency with which it remits tax deposits to the federal
government. A business can make deposits in three ways:
• On a monthly basis. Under this approach, a business must
deposit its payroll taxes no later than the fifteenth day of the
month following the reporting month. This method can be
used only if the total amount of deposits during the lookback
period is less than $50,000. The lookback period is the four
previous quarters during which deposits were reported on
Form 941, beginning with July 1 and ending on June 30 of
the next year.When making this determination, include all
Social Security, federal income, and Medicare taxes withheld
during the lookback period. A new employer will generally
fall into this category, because the amount of the lookback
period (which does not yet exist) is assumed to be zero.
• On a semiweekly basis. The government makes it mandatory
to use the semiweekly deposit schedule if the dollar volume
of taxes during the annual lookback period exceeded
$50,000. If it did not, deposits can be made on a monthly
basis. Semiweekly refers to two possible dates in each week by
which deposits must be made if a payroll payment date falls
within that week. If a payment date falls on a weekend,
Monday, or Tuesday, then the deposit must be made by the
following Friday. If the payment date falls on a Wednesday,
Thursday, or Friday, then the deposit must be made by

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