Page 219 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
Wednesday of the following week. One additional business
day is added to this schedule if the day by which a deposit is
required falls on a banking holiday.
• Using electronic funds transfers. The minimum threshold for this
approach is $200,000 in deposits during the lookback period,
or if the company was required to use it in the previous year.
Once a company is required to use this method but fails to do
so, it will be subject to a 10 percent penalty. Payments are
made using the Electronic Federal Tax Payment System
(EFTPS). Under this approach, a business notifies its bank of
the amount to be deposited with the government; the bank
then electronically shifts the funds from the business’s account
to the government’s. This gives the government more imme-
diate access to the funds. No deposit coupon is required if
this system is used, since a coupon is required only to identify
an accompanying check, and this method requires no check.
The payment intervals are the same as those used for semi-
weekly depositors, except that any company accumulating
$100,000 of taxes for any payroll must deposit it on the busi-
ness day immediately following the payroll payment date. A
business can enroll in the EFTPS by completing the EFTPS
Business Enrollment Form (Form 9779).

There is one special case that overrides all of the preceding deposit-
ing scenarios. If a company accumulates a payroll tax liability of
$100,000 or more as a result of a payroll, the amount must be deposit-
ed no later than the next business day, irrespective of the company’s sta-
tus as determined through the lookback method. This special case does

not continue to apply if a company’s subsequent payroll tax liabilities
drop below $100,000; however, if a company had previously been a
monthly depositor, this situation will result in the company immedi-
ately converting to a semiweekly deposit schedule.

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