20.1.4  Failure to Deposit Penalty

Manual Transmittal

January 06, 2012

Purpose

(1) This transmits revised IRM 20.1.4, Penalty Handbook, Failure to Deposit Penalty.

Material Changes

(1) During this revision, minor changes have been made to update web sites and various subsections renumbered. Significant changes to this IRM are listed in the table below:

Reference Change Details
IRM 20.1.4.2 through IRM 20.1.4.2.4 Incorporated IPU #110038 Issued 01-03-2011 - TD 9507 (REG-153340-09). Renumbered and edited several section's titles as follows:
  • IRM 20.1.4.2.1 is now Electronic Funds Transfer (EFT) (formerly listed as IRM 20.1.4.2.5).

  • IRM 20.1.4.2.2 is now Electronic Federal Tax Payment System (EFTPS) (formerly listed as IRM 20.1.4.2.5.1)

  • IRM 20.1.4.2.3 is now Same-Day Wire (formerly IRM 20.1.4.2.5.2, Same Day Settlement/ FEDWIRE/ETA).

  • IRM 20.1.4.2.4 was not replaced.

IRM 20.1.4.3 Added information regarding Form 1042 penalty.
IRM 20.1.4.6 IPU #110038- Issued 01-03-2011 - Added de minimis exception for Form 1042.
20.1.4.7.1 Removed reference to unauthorized financial institution per TD 9507 (REG-153340-09).
IRM 20.1.4.7.2 through IRM 20.1.4.7.5 Incorporated IPU #110038 Issued 01-03-2011:
  • Deposits are due only on business days, no longer on banking days.

  • Notice 2010-87 provides transitional relief for deposits made on banking days for 2011.

  • Added info on TD 9507 (REG-153340-09) for EFT required deposits and reference to BMFOLE.

IRM 20.1.4.8 IPU #110038- Issued 01-03-2011:
- Replaced reference to banking days with business days.
IRM 20.1.4.8.2 Added "on the original return filings (TC 150 amounts)" to paragraph (1).
IRM 20.1.4.8.3 through IRM 20.1.4.8.6, IPU #110038 Issued 01-03-2011:
Replaced reference to banking days with business days.
IRM 20.4.8.7 IPU #110038 Issued 01-03-2011
Changed examples of shortfall makeup dates for clarity.
IRM 20.1.4.8.8.1 IPU #110038 Issued 01-03-2011:
  • Defined total tax as the TC 150 plus any TC 291, TC 290, TC 300 tax adjustments reduced by any Advanced Earned Income Credit (AEIC) allowance (TC 766).

  • Eliminated the Education Jobs and Medicaid Assistance Act of 2010 (AEIC) for tax years beginning after December 31, 2010.

IRM 20.1.4.9.1 IPU #110038 Issued 01-03-2011
Added "or an understatement of the ROFTL of the credit reduction adjustment amount."
IRM 20.1.4.10.3 Updated paragraph (3) per Treas. Reg. 40.6302(c)-1 regarding safe harbor (95% rule).
IRM 20.1.4.10.6 IPU #110038 Issued 01-03-2011
Removed info pertaining to coupons as a deposit method, per TD 9507 (REG-153340-09).
IRM 20.1.4.10.6.1 Added information to coincide with Treas. Reg. 40.6302(c)-1 in that the use of the safe harbor (1/6th rule) is not permitted unless a tax was imposed throughout the look-back quarter.
IRM 20.1.4.10.6.2 Deleted.
IRM 20.1.4.10.7.2 Updated to coincide with Treas. Reg. 40.6302(c)-1 regarding safe harbor (95% rule).
IRM 20.1.4.10.7.3 and IRM 20.1.4.10.8.2 Updated to coincide with Treas. Reg. 40.6302(c)-2 regarding safe harbor (95% rule).
IRM 20.1.4.11.2 Removed the 90 percent safe harbor rule from Treas. Reg. 1.6302-2 beginning for tax periods 2011 and subsequent (TD 9507).
IRM 20.1.4.14.2 IPU #110038 Issued 01-03-2011
Added an exception for not entering State Code Indicator on 2012 and later tax returns per TD 9507 (REG-153340-09).
IRM 20.1.4.21.3 IPU #110038 Issued 01-03-2011:
  • Edited text to advise that the Form 941 de minimis exception for depositing must be refigured for both the tax adjustment quarter and the following quarter as a result.

  • Edited text to advise if a new ROFTL is not received and the tax is being increased, use averaging on the new corrected tax amount (TC 150 plus any TC 291, TC 301, TC 290, TC 300 tax adjustments).

IRM 20.1.4.21.5 Updated reminder and example in paragraph (3) to account for January 2011 programming correction.
IRM 20.1.4.24 through IRM 20.1.4.24.3 IPU #110038 Issued 01-03-2011
Removed information pertaining to coupons per TD 9507 (REG-153340-09).
IRM 20.1.4.26.2 IPU #110038 Issued 01-03-2011
Added information regarding administrative waiver procedures for nonqualified stock options.
IRM Exhibit 20.1.4.2 IPU #110038 Issued 01-03-2011
Updated examples per TD 9507 (REG-153340-09) to include EFT requirement for 2011.
IRM Exhibit 20.1.4-8 Removed the 90 percent safe harbor rule from Treas. Reg. 1.6302-2 beginning for tax periods 2011 and subsequent (TD 9507).
All sections Various grammatical, editorial, and hyper-link corrections were made throughout the IRM.

Effect on Other Documents

IRM 20.1.4, dated 04-20-2010 is superseded. This IRM also incorporates Interim Procedural Update (IPU) #110038 issued 01-03-2011.

Audience

SB/SE Compliance Employees and other operating division employees that work with penalties.

Effective Date

(01-06-2012)

Signed by
Duane Gillen, SE:S:E:EP
Director, Examination Policy
Small Business/Self-Employed

20.1.4.1  (01-06-2012)
Overview and General

  1. This is a section of the penalty handbook that contains policies and procedures for all IRS employees on the failure to deposit (FTD) penalty.

  2. IRC 6656 provides for the FTD penalty if a taxpayer does not deposit tax in the correct amount, within the prescribed time period, and/or in the required manner.

  3. See IRM Exhibit 20.1.4-1, Employment and Excise Tax Program Forms, for a list of the applicable forms related to the FTD penalty.

  4. The obligation to deposit employment/excise taxes is ongoing and requires that the taxpayer continue to follow the requirements as long as the taxpayer is incurring these taxes. For example, as long as an employer has employees and is issuing a payroll, that employer must deposit as required.

    1. IRC 6656 provides relief from the FTD penalty for non-compliance if the taxpayer can show that the failure to deposit was due to reasonable cause and not willful neglect.

    2. IRC provisions for removal of the FTD penalty due to reasonable cause are expanded in Policy Statements. See IRM 1.2.20.1.1, Policy Statement 20-1 (Formerly P–1–18), and IRM 1.2.20.1.1, Policy Statement 2–7. Other statutory and/or administrative provisions may also apply to allow penalty relief. See IRM 20.1.4.26, FTD Penalty Relief, for penalty relief provisions specific to the FTD penalty.

  5. In accordance with Policy Statement 20-1, the primary purpose of penalties is to enhance voluntary compliance (also see IRM 20.1.1.2.1, Encouraging Voluntary Compliance).

20.1.4.1.1  (04-20-2010)
Who Assesses

  1. Customer Service Representatives or Tax Examiners may assess or adjust the penalty based on record of federal tax liability (ROFTL) information, reasonable cause, statutory waivers, or administrative waivers. Taxpayer Service Representatives (TSRs), Collection Tax Examiners, and Revenue Officers may recommend assessment or non-assessment of the penalty on secured returns. When there is indication that a taxpayer filed in a previous quarter but no current return is on file, the Internal Revenue Service contacts the taxpayer and requests a return. A return obtained in this manner is a "secured" return.

  2. Tax Compliance Officers, Tax Auditors, and Revenue Agents, Collection, TE/GE, and Employment Tax Examiners make penalty assertion determinations on examined and/or secured returns.

20.1.4.1.2  (01-06-2012)
Criteria for Reporting Tax and ROFTL Information

  1. Taxpayers who withhold taxes (e.g., employment tax liabilities) are required to file returns that:

    1. Report their tax liability,

    2. Categorize their tax liability, FICA (Social Security and Medicare), Federal Income Tax (FIT), etc.), and

    3. Indicate the date during the return period on which each liability was incurred using a record of federal tax liability (ROFTL) schedule.

      Exception:

      However, taxpayers whose total liability is below the deposit threshold are not required to indicate the date each liability was incurred. In fact, the form instructions specifically instruct these taxpayers to leave the ROFTL schedule blank. See IRM 20.1.4.6, De Minimis Exception to Deposit Requirements.

  2. In addition to reporting the total tax liability incurred within the tax return period, the taxpayer must provide a valid periodic breakdown of its tax liability (see exception above). This periodic breakdown is generally referred to as the ROFTL schedule. This liability information is requested in various formats on the different employment tax returns. For example, a monthly schedule depositor of Form 941, Employer’s QUARTERLY Federal Tax Return reports its monthly liability amounts on page 2 of Form 941, whereas the semi-weekly schedule Form 941 depositor is required to report its daily liability amounts on Form 941 Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors.

    1. The ROFTL shows the dates that each liability amount is incurred (for monthly schedule depositors, only the month is shown). For employment tax forms, this will be the date or month that the employer issues paychecks to the employees. The ROFTL asks for the amounts and dates that each liability was incurred, not for a record of the deposits that were made to pay the tax liability.

    2. Deposit (TC 650) and payment (TC 610/670) information (received by the Service throughout the return period) is compared to the liability information (provided by the taxpayer on or with the return) to determine compliance with the deposit requirements. All transaction codes (TCs) are defined in OFFICIAL USE ONLY Document 6209, IRS Processing Codes and Information.

20.1.4.1.3  (04-20-2010)
Notice Information

  1. As a return is processed, various computer codes are added to the return data. These codes are written on the return by Code and Edit function or they are systemically generated by the computer program from the input of the tax data shown on the return. See IRM 20.1.4.14.6, Schedule Indicator Codes (SIC), to determine whether the FTD penalty issue will be:

    • Manually reviewed, calculated, assessed, or

    • Systemically assessed.

  2. Some of the notices related to the FTD program are internal notices, which require a mandatory review of an account.

    • CP 194 Notice—Issued for manual review because Master File does not have enough information to determine if the FTD penalty applies. See IRM 20.1.4.15, CP 194 Notices (Possible FTD Penalty).

    • CP 294 Notice—Issued to determine if an additional 5 percent penalty (fourth tier) applies on a module where the tax liability remains unpaid and the FTD penalty is restricted by TC 180 (Deposit Penalty). See IRM 20.1.4.20, CP 294 Notice- Possible 15 Percent Rate.

  3. Notices issued directly to taxpayers, require a response.

    • CP 207 Notice—Issued to request a valid Record of Tax Liability (ROFTL) schedule if the return is received with a missing, incomplete, inaccurate or illegible ROFTL, and of the impending proposed averaged FTD penalty that may result if the requested ROFTL is not received. See IRM 20.1.4.18, CP 207/207L Notices.

    • CP 207L Notice—Issued to request a valid ROFTL on "Large Dollar" proposed FTD penalty notices of $75,000 or more.

      Note:

      The Ogden or Cincinnati Large Corp Technical Unit (LCTU), in advance of the CP 207L notice mail-out, will attempt to secure the corrected ROFTL via telephone contact. If the corrected ROFTL is secured, the CP 207L is voided and corrective action taken by the LCTU technician.

      See IRM 20.1.4.18, CP 207/207L Notices.

    • CP 161 Notice—First notice issued to inform taxpayer of tax, penalty, and/or interest due.

    • Other adjustment notices (e.g., math error, balance due or overpayment) are issued to inform the taxpayer of a penalty assessment.

20.1.4.2  (01-06-2012)
Authorized Deposit Methods

  1. Generally, taxpayers who file Form 941, Employer's Quarterly Federal Tax Return, Form 943, Employer's Annual Tax Return for Agricultural Employees, Form 944, Employer's ANNUAL Federal Tax Return, Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, Form 945, Annual Return of Withheld Federal Income Tax, Form 720, Quarterly Federal Excise Tax Return, Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, and Form CT-1, Employer's Annual Railroad Retirement Tax Return must deposit taxes using an authorized deposit method when the tax liability reaches certain dollar amounts. See IRM 20.1.4.6, De Minimis Exception to Deposit Requirements, for additional information. However, Form 720 filers are liable for deposits of only certain excise taxes. See IRM 20.1.4.10, Form 720 Reporting Requirements, for additional information.

  2. A taxpayer is required to deposit taxes by electronic funds transfer (EFT) deposit systems.

  3. Payments made directly to the IRS can result in a failure to deposit penalty (FTD) assessed at the 10 percent rate.

  4. Deposits by Form 8109 FTD coupons cannot be processed after December 31, 2010.

20.1.4.2.1  (01-06-2012)
Electronic Funds Transfer (EFT)

  1. Treasury Decision (TD) 9507 (REG-153340-09) ended the use of paper federal tax deposit (FTD) coupons beyond December 31, 2010. Therefore, beginning January 1, 2011, businesses not already required to use EFT that have a deposit requirement (such as employment tax, excise tax, and corporate income tax) will be required to make their federal tax deposits via an electronic funds transfer (EFT) system. This system allows for the electronic transfer of funds from taxpayer accounts and the conveyance of deposit information directly to the U.S. Treasury.

  2. Deposits made electronically use the automated clearing house (ACH) financial network, which transfers funds and passes tax payment information to IRS. ACH is the banking industry’s system for moving payments electronically between financial institutions (for electronic federal tax payment system (EFTPS ) purposes, between financial institutions and the U.S. Treasury).

  3. Before any attempt is made to transfer monies electronically, taxpayers must enroll in the system. The enrollment process allows the taxpayer to choose the type of payment method very similar to the one a bank may use to arrange for a direct debit (e.g., an automated bill payer account), or credit (e.g., direct deposit) to an account.

    1. Taxpayers can make payments directly through EFTPS by instructing the U.S. Treasury’s financial agent to originate an ACH debit transaction against his/her/its bank account.

    2. Taxpayers can arrange for a tax professional, financial institution, payroll service, or other trusted third party to make deposits on their behalf.

    3. Taxpayers can instruct their financial institution to debit their accounts to the U.S. Government’s financial institution or

    4. Taxpayers can instruct their financial institution to initiate a same-day wire payment on their behalf. See IRM 20.1.4.2.3, Same-Day Wire.

  4. There are no new penalties or changes to the basic deposit rules inherent in using EFT. Taxpayers are penalized for not depositing on time, in the correct amount, or in the manner required. A taxpayer will be assessed this same avoidance portion of the FTD penalty for failing to deposit electronically (not depositing in the required manner).

    1. Beginning January 1, 2011, EFT is the only authorized deposit method. Therefore, a depositary tax obligation paid directly to the IRS rather than deposited will be subject to the avoidance portion of the FTD penalty for failure to deposit using the EFT system.

    2. Taxpayers that were required to use EFT in years prior to 2011 that paid a depositary tax obligation directly to the IRS or via a deposit coupon were subject to the avoidance portion of the FTD penalty for failure to deposit using the EFT system. Taxpayers that were not required to use EFT in years prior to 2011 that paid a depositary tax obligation directly to the IRS or through an unauthorized financial institution were subject to the avoidance portion of the FTD penalty for failure to deposit using an authorized deposit system.

20.1.4.2.2  (01-06-2012)
Electronic Federal Tax Payment System (EFTPS)

  1. The electronic federal tax payment system (EFTPS) is the electronic tax payment system that the federal government uses to accept all electronically transmitted tax payments. EFTPS will accept all types of tax payments from both businesses and individuals.

  2. Bank of America is the sole financial institution authorized to operate EFTPS as a U.S. Treasury financial agent.

  3. Before any funds can be transferred electronically, the taxpayer must be enrolled in EFTPS. Taxpayers are directed to call the financial agents for assistance on EFTPS.

  4. Bank of America assistance numbers are:

    • 1–800–555–4477 (voice)

    • 1–800–555–8778 EFTPS-Online

    • 1–800–244–4829 (Spanish)

    • 1–800–733–4829 (TDD)

    • 1–800–605–9876 for financial institutions

    • 1–877–333–8292 FEDTAX/EFTPS for federal agencies

  5. Taxpayers with entity related questions that the financial agent cannot resolve may be referred to the IRS Business and Specialty Tax Line at 1–800–829–4933.

  6. Several indicators have been created to aid in identifying and working with electronic deposits. See IRM 3.17.277.1.3, EFTPS Customer Service Responsibilities.

  7. Deposits made after December 31, 1996 will carry an extra field in the record layout for recording how the payment was received. Whether the deposit or payment was received electronically is displayed for determining whether the taxpayer deposited in the required manner.

  8. Refer to IRM 21.7.1.4.8.1, Electronic Federal Tax Payment System, for requesting payment research information.

20.1.4.2.3  (01-06-2012)
Same-Day Wire

  1. The funds-transfer system (Fedwire) owned and operated by the Federal Reserve Bank (FRB), is used primarily for the transmission and same day settlement of payment orders. Financial institutions initiate the funds-transfer through the Fedwire system. EFTPS tax wires are then processed by the Credit Gateway Federal Tax Application (FTA) and the money transferred into the U.S. Treasury Account.

  2. ACH is the banking industry’s system for moving payments electronically between financial institutions (for EFTPS purposes, between financial institutions and the Treasury). Because ACH is a two-step process (initiate the instructions one day; the money actually moves the next), some taxpayers (e.g., $100,000 depositors) had difficulty making timely deposits. If taxpayers missed the ACH cut-off time to initiate a timely deposit, they could use the same-day wire feature as a deposit option.

  3. As the systems have evolved, the same-day wire feature is now referred to as the Federal Tax Application (FTA).

  4. Taxpayers enrolled in EFTPS can initiate a same-day wire using the FTA. The instructions for initiating a same-day wire are located in the SAME-DAY TAXPAYER WORKSHEET.

  5. Taxpayers who require a same-day settlement will need to assist in directing its financial institution to the proper format for making the payment.

    1. All same-day wires are sent by the business taxpayer’s financial institution. Financial institutions have two Fedwire options for making a same-day wire. It is important that its bank use the proper format.

    2. The guidelines for financial institutions for making payments using FTA can be found at http://fms.treas.gov/eftps/transition_materials.html.

    3. FEDWIRE funds transfer begins daily operations at 12:30 a.m. Eastern Time (ET). The current hours for FTA processing are 8:30 a.m. to 5:00 p.m. ET. The same-day wire transactions sent after 12:30 a.m. and before 8:30 a.m. ET are queued for processing when FTA opens for the day. The same-day wire transactions sent AFTER the 5:00 p.m. ET cutoff, are rejected and NOT processed the next day. It is recommended that financial institutions transmit the transaction well in advance of the cutoff. Taxpayers should make arrangements to have their financial institution notify them immediately if a payment is rejected and returned, so that the transaction can be corrected and resubmitted before the 5:00 p.m. ET cut-off.

  6. FTA payments are identified by Payment Method 3 or 4 in the second position of the EFT number. However, since early in 2004, the payment was only identified by Payment Method 3 in the second position of the EFT number.

  7. Taxpayers may call the FTA toll-free customer service number at 1-800-382-0045 for assistance in making their payment or in resolving problems with their FTA payment.

  8. For more information on FTA, see IRM 3.17.277, Electronic Payments.

20.1.4.3  (01-06-2012)
Restrictions on Assessments

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    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

20.1.4.4  (01-06-2012)
Federal Agencies

  1. According to IRM 1.2.20.1.2, Policy Statement 2–4, penalties and interest will not be asserted against federal agencies.

  2. These types of agencies are marked with an employment code "F" on the entity module. See IRM 3.13.2.5.3, Employment Code (EC) "F" , for additional information.

20.1.4.5  (04-20-2010)
State and Local Health and Welfare

  1. In Notice 2003-70, the IRS determined that the state and local government health and welfare agencies, acting as agents under IRC 3504 with respect to employers who receive public assistance to pay for in-home domestic services, are not subject to federal tax deposit requirements. These state agents need only to make payments by the due date of the return. Payment(s) does not have to be deposited.

  2. These agencies assume responsibility for reporting and paying FICA and FUTA and any withheld income tax with respect to individuals furnished by the agency, or hired directly by the recipients of public assistance, to provide domestic services (chore workers) for recipients on public assistance.

  3. Do not assess any failure to deposit penalty on these entities. In addition, abate the penalty on modules (for all years) with an unreversed failure to deposit penalty when working on other issues on these modules.

  4. These types of agencies are marked with an employment code "A" on the entity module.

20.1.4.6  (01-06-2012)
De Minimis Exception to Deposit Requirements

  1. While taxpayers must periodically deposit their employment taxes using either the monthly or semi-weekly deposit schedule, the de minimis exception to the deposit rule allows taxpayers to remit their employment taxes with their return instead.

  2. The record of federal tax liability (ROFTL) information is not required when the de minimis exception for depositing is met. See IRM 20.1.4.1.2, Criteria for Reporting Tax and ROFTL Information.

  3. When the total tax amount exceeds the de minimis exception amount (as shown below) for depositing, then taxpayers must periodically deposit their employment taxes using their required monthly or semi-weekly deposit schedule. Any payment of tax paid directly or remitted with the return is subject to the avoidance penalty.

  4. See IRM 20.1.4.7.1 (1)(d), Time Sensitive Four Tier Penalty System, for the avoidance penalty rate.

  5. The de minimis exception to deposit requirements for Form 941 is as follows:

    1. Form 941 (201003 and Subsequent): The de minimis exception to deposit requirements was modified to allow employers who file quarterly Form 941 for tax periods beginning 01–01–2010 to base the de minimis determination on the immediate prior quarter. Therefore, the de minimis exception is applicable if the total tax in either the current quarter or the prior quarter is less than $2,500. However, if the total tax is $2,500 or more in the current quarter and in the prior quarter, or there is a $100,000 next-day deposit obligation in the current quarter, any amount paid with the return is subject to the 10 percent avoidance penalty.

    2. Form 941 (200103 thru 200912): The de minimis exception to deposit requirements is applicable for tax amounts less than $2,500. If the total tax is $2,500 or more, any amount paid with the return is subject to the 10 percent avoidance penalty.

    3. Form 941 (199809 thru 200012): The de minimis exception to deposit requirements is applicable for tax amounts less than $1,000. If the total tax is $1,000 or more, any amount paid with the return is subject to the 10 percent avoidance penalty.

    4. Form 941 (199806 and Before): The de minimis exception to deposit requirements is applicable for tax amounts less than $500. If the total tax is $500 or more, any amount paid with the return is subject to the 10 percent avoidance penalty.

  6. The de minimis exception to deposit requirements for annual Form 943 and Form 945 is as follows:

    1. Form 943 and Form 945 (200112 and Subsequent): The de minimis exception to deposit requirements is applicable for tax amounts less than $2,500. If the total tax is $2,500 or more, any amount paid with the return is subject to the 10 percent avoidance penalty.

    2. Form 943 and Form 945 (199912 thru 200012): The de minimis exception to deposit requirements is applicable for tax amounts less than $1,000. If the total tax is $1,000 or more, any amount paid with the return is subject to the 10 percent avoidance penalty.

    3. Form 943 and Form 945 (199812 and Before): The de minimis exception to deposit requirements is applicable for tax amounts less than $500. If the total tax is $500 or more, any amount paid with the return is subject to the 10 percent avoidance penalty.

  7. The de minimis exception to deposit requirements for annual Form 944 (200612 and Subsequent) is as follows:
    If a Form 944 liability amount is less than $2,500 for a quarter, Master File considers the deposit as timely if received by the last day of the month after the end of a Form 944 quarter (mirroring the Form 941 de minimis exception, as discussed in (5) (b) above). Employment taxes accumulated for less than $2,500 during the fourth quarter can be either deposited by January 31 or remitted with a timely filed return for the return period. If a quarterly Form 944 liability amount reaches or exceeds $2,500, then deposits are due monthly, or semi-weekly, depending on the deposit schedule. See IRM Exhibit 20.1.4-5, Form 944 De Minimis Exception.

  8. The de minimis exception to deposit requirements for annual Form 940 is as follows:

    1. Form 940 (200512 and Subsequent): If the TC 150 amount is over $500, any amount paid with the return may be subject to the 10 percent avoidance penalty.

    2. Form 940 (200412 and Before): If the TC 150 amount is over $100, any amount paid with the return may be subject to the 10 percent avoidance penalty.

  9. The de minimis exception to deposit requirements for quarterly Form 720 is as follows:

    1. Form 720 (200112 and Subsequent): If the amount from Form 720, Part I, is over $2,500, the amount paid with the return may be subject to the 10 percent avoidance penalty, unless a safe harbor rule applies.

    2. Form 720 (200109 and Before): If the amount from Form 720, Part I is over $2,000, the amount paid with the return may be subject to the 10 percent avoidance penalty, unless a safe harbor rule applies.

  10. The annual de minimis exception to deposit requirements for annual Form 1042 (For All Periods) is as follows:
    If undeposited taxes are $200 or more and it is the end of December, any amount paid with the return may be subject to the 10 percent avoidance penalty.

  11. The de minimis exception to deposit requirements for annual Form CT-1 is as follows:

    1. Form CT-1 (200112 and Subsequent): If the TC 150 is $2,500 or more, any amount paid with the return may be subject to the 10 percent avoidance penalty.

    2. Form CT-1 (199912 thru 200012): If the TC 150 is $1,000 or more, any amount paid with the return may be subject to the 10 percent avoidance penalty.

    3. Form CT-1 (199312 thru 199812): If the TC 150 is $500 or more, any amount paid with the return may be subject to the 10 percent avoidance penalty.

    4. Form CT-1 (199212 and Before): If the amount paid with the return exceeds $100, it may be subject to the 10 percent avoidance penalty.

20.1.4.7  (01-06-2012)
Failure to Deposit Penalty Rate

  1. The three components of a correct deposit are that it is made timely, in the correct amount, and in the correct manner.

    1. A failure to comply with any of these components will subject the deposit to the FTD penalty.

    2. Because there may be multiple deposits (with each individual deposit subject to scrutiny for compliance) on any one account, the FTD penalty that is assessed on the account will be a sum of the "time-sensitive" penalty(ies) and/or the "avoidance" penalty(ies).

  2. The percentage rate charged depends on the following:

    • The number of calendar days a deposit is late, or

    • Whether it involves a direct payment.

20.1.4.7.1  (01-06-2012)
Time Sensitive Four Tier Penalty System

  1. There is a time sensitive four-tier penalty system for late deposits. The penalty rate assessed depends on the number of calendar days a deposit is late starting from the due date of the liability. For liability amounts not properly or timely deposited, the penalty rates are as follows.

    1. 2 percent for deposits 1—5 days late,

    2. 5 percent for deposits 6—15 days late,

    3. 10 percent for deposits made more than 15 days late. This also applies to amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due.

    4. 10 percent for required deposits paid directly to the IRS or paid with the tax return.

    5. 15 percent (actually, a 5 percent addition to the 10 percent for late payment in (c) above) for all 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 the taxpayer received notice and demand for immediate payment, whichever is earlier. See IRM 20.1.4.14.4, Penalty Indicator Codes (PIC) (15 Percent Rate).

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

20.1.4.7.2  (01-06-2012)
Deposit Due Dates

  1. The deposit due dates are determined by the deposit requirements, which vary according to the tax form involved and the amount of tax. For help in determining deposit due dates see IRM Exhibit 20.1.4-4, Forms 941, 943, 944, 945, and CT-1 Deposit Requirements, IRM 20.1.4.10, Form 720 Reporting Requirements, and IRM 20.1.4.11, Form 1042.

  2. Treasury Regulations state that deposits are due on or before the deposit due date. This due date is the last day the deposit can be considered timely. Taxpayers may make their deposit any time between the date the payroll liability is incurred and the date the deposit is due. They are not required to wait until the due date to make a deposit and will not receive a penalty for making deposits prior to the due date. An employer is not required to make a deposit more often than a payroll is made. However, 100 percent of the amount required to be deposited is due on the deposit due date unless the employer meets one of the exceptions. See IRM Exhibit 20.1.4-4, Forms 941, 943, 944, 945, and CT-1 Deposit Requirements and IRM 20.1.4.6, De Minimis Exception to Deposit Requirements.

  3. Unless there are specific instructions to the contrary contained in the Treasury Regulations, the due date is extended to the next day that is not a Saturday, Sunday, or legal holiday.

  4. Deposits are due only on business days. A business day is every calendar day that is not a Saturday, Sunday, or legal holiday under IRC 7503. Additionally, the term “legal holiday” for FTD purposes includes only those legal holidays in the District of Columbia. Thus, a statewide legal holiday will no longer be considered a legal holiday unless the holiday coincides with a legal holiday in the District of Columbia. The following days are currently legal holidays in the District of Columbia: New Year's Day, Birthday of Martin Luther King, Jr., Washington's Birthday, District of Columbia Emancipation Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, Christmas Day, and the day of the inauguration of the President, every fourth year.

    1. Notice 2010-87 provides transitional relief for determining the timeliness of federal tax deposits (FTDs) under IRC 6302. The notice provides that the Internal Revenue Service will not assert penalties under IRC 6656 for FTDs due in calendar year 2011 that are untimely solely because the depositor treated a statewide legal holiday as if it were a legal holiday in the District of Columbia. Therefore, statewide legal holidays are treated as non-business days for 2011 and prior.

    2. Employers who are required to deposit taxes on a day that is not a business day will be treated as timely depositing such taxes if they are deposited on the first business day thereafter. See IRM 20.1.4.8 (3), Employment Tax (Forms 941, 943, 944, 945, and CT-1).

    3. See IRM 20.1.4.8.3, Monthly Depositors, for a discussion of these rules as applied to employers required to deposit on a monthly basis.

    4. See IRM 20.1.4.8.5 (2), Rule For Semi-weekly Non-Business Days, for a discussion of these rules as applied to employers required to deposit on a semi-weekly basis.

  5. CC BMFOLE--Entity displays an EFT Indicator Field shown as "Elec Dep Yr" . A blank "Elec Dep Yr" field indicates that the taxpayer is required to use EFT beginning for deposits made in 2011 per TD 9507 (REG-153340-09). When there is a year referenced in the "Elec Dep Yr" field, it represents the tax year that the taxpayer became required to deposit through EFT under the old $200,000 threshold regulations. Taxpayers avoid the FTD system when they make payments in another manner. This type of noncompliance is called FTD avoidance and is subject to the FTD penalty. See IRM 20.1.4.6, De Minimis Exception to Deposit Requirements.

  6. Effective October 17, 1995, any non-EFT deposit made by a taxpayer that is required to deposit via EFT is subject to a 10 percent avoidance penalty for not being made in the correct manner.

  7. Transaction code (TC) 670 identifies direct payments and generally indicates that the FTD avoidance penalty applies. There are exceptions.

    1. All TC 640 or 670 payments transmitted by EFT are treated as correctly deposited (effective March 1997).

    2. FEDWIRE payments, made by Form CT–1 filers (prior to 2008), are listed as TC 670 with blocking series 700.

    3. Taxpayers in bankruptcy may be ordered by the court to make payments directly to the IRS. In such cases, the FTD avoidance penalty would not apply. If the account has a bankruptcy indicator, TC 520, closing code (CC) 60-67, 81 and 85-89 with freeze code -V or TC 520, CC 81 with freeze code -W, contact the appropriate Insolvency function to determine if the taxpayer is under court order to make direct payments.

    4. Any TC 670 received after the return has posted (in response to a notice/bill) will not have the avoidance penalty assessed against it. If the taxpayer files the return with a balance owing (has not deposited sufficiently), the notice sent will include the maximum FTD penalty.

  8. Regulations require certain taxes to be paid using deposits. Payments for depositary taxes made in a manner other than a deposit may be subject to the FTD avoidance penalty, unless the taxpayer meets an exception.

    1. See IRM Exhibit 20.1.4-4, Forms 941, 943, 944, 945, and CT-1 Deposit Requirements, for the safe harbor exception.

    2. See IRM 20.1.4.6, De Minimis Exception to Deposit Requirements.

  9. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  10. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

20.1.4.7.3  (01-06-2012)
Business Days (Banking Days)

  1. Beginning 2011, banking days are replaced by business days per TD 9507 (REG-153340-09). A business day for FTD purposes is every calendar day that is not a Saturday, Sunday, or those legal holidays in the District of Columbia. Thus, a statewide legal holiday formerly allowed as a banking holiday will no longer be considered unless the holiday coincides with a legal holiday in the District of Columbia.

    Exception:

    Notice 2010-87 provides transitional relief for determining the timeliness of federal tax deposits (FTDs) under IRC 6302. The notice provides that the Internal Revenue Service will not assert penalties under IRC 6656 for FTDs due in calendar year 2011 that are untimely solely because the depositor treated a statewide legal holiday as if it were a legal holiday in the District of Columbia. Therefore, statewide legal holidays are treated as non-business days for 2011 and prior.

  2. Form 8109 coupons, discontinued as of December 31, 2010, were accepted at authorized financial institutions, or depositaries. Banks may establish a daily cut off time that is earlier than their lobby hours. Deposits received after the cut off time were credited to the next business day.

20.1.4.7.4  (01-06-2012)
Legal Holidays (Bank Holidays)

  1. Beginning 2011, banking days are replaced by business days for deciding a deposit due date. A business day, unlike a banking day, does not consider statewide legal holidays for FTD purposes. A business day is defined as every calendar day that is not a Saturday, Sunday, or those legal holidays in the District of Columbia. Thus, a statewide legal holiday formerly: allowed as a banking holiday, will no longer be considered unless the holiday coincides with a legal holiday in the District of Columbia. The following days are currently legal holidays in the District of Columbia: New Year's Day, Birthday of Martin Luther King, Jr., Washington's Birthday, District of Columbia Emancipation Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, Christmas Day, and the day of the inauguration of the President, every fourth year. For more information about banking days.

    Exception:

    Notice 2010-87 provides transitional relief for determining the timeliness of federal tax deposits (FTDs) under IRC 6302. The notice provides that the Internal Revenue Service will not assert penalties under IRC 6656 for FTDs due in calendar year 2011 that are untimely solely because the depositor treated a statewide legal holiday as if it were a legal holiday in the District of Columbia. Therefore, statewide legal holidays are treated as non-business days for 2011 and prior.

20.1.4.7.5  (01-06-2012)
Application of Payments

  1. Payments are identified on Master File as follows:

    • TC 610 — Payment received with a return—depending on the reason for the payment with the return, this payment may be liable for the avoidance portion of the FTD penalty.

    • TC 670 — Subsequent payment — See IRM 20.1.4.24.2.2, FTD as Subsequent Payment, for possible FTD avoidance penalty.

    • TC 650 — Federal Tax Deposit,

    • TC 700 — Credit Applied,

    • TC 706 — Overpayment Offset into a Balance Due Module,

    • TC 760 — Substantiated Credit Payment Allowance,

    • TC 710 — Overpayment Credit Applied from Prior Tax Period,

    • TC 716 — Generated Overpayment Applied from Prior Tax Period,

    • TC 766 — COBRA Credit (Credit Reference Number (CRN) 299), and

    • TC 766 — HIRE Credit (Credit Reference Number (CRN) 296).

  2. On a TC 706 overpayment, Master File will only use the credit against the 4th Tier 15 percent penalty amount. Otherwise, the credit is not recognized in the penalty calculation.

  3. If the TC 716 credit availability date is not present (e.g., on CP 194, BMFOL, etc.), Master File will use the first day of the tax period as the credit effective date.

  4. On a TC 710 credit transfer, Master File will use the first day of the tax period as the credit effective date.

  5. The COBRA TC 766 (CRN 299) credit is applied by Master File using the first day of the tax period as the credit effective date and uses the credit in the FTD penalty calculation.

  6. The HIRE TC 766 (CRN 296) credit is applied by Master File on April 1, 2010, as the credit effective date and uses the credit in the FTD penalty calculation.

  7. For periods after December 31, 2001, deposits are applied to the most recently ended deposit period or periods within the specified tax period to which the deposit relates as provided for in Rev. Proc. 2001-58. The application of deposits to the most recently ended deposit period will, in some cases, prevent the cascading penalties where a depositor either fails to make deposits or makes late deposits. See the job aid on the Most Recent Payment Allocation Method located in Chapter 7 of IRM 21 Job Aids.

20.1.4.8  (01-06-2012)
Employment Tax (Forms 941, 943, 944, 945, and CT-1)

  1. Taxpayers follow a pre-determined deposit schedule, under which the frequency of deposits generally remains consistent throughout the year.

  2. An employer is not required to make a deposit more often than a payroll is made. However, 100 percent of the amount required to be deposited is due on the deposit due date unless the employer meets one of the safe harbor exceptions. See IRM 20.1.4.8.7, Safe Harbor.

  3. The regulations provide that if taxes are required to be deposited on any day that is not a business day, the taxes will be treated as timely deposited if deposited on the first business day thereafter.

    Example:

    If a deposit is required to be made on a Friday and Friday is a legal holiday, the deposit will be considered timely if it is made by the following Monday (if that Monday is a business day). Semiweekly schedule depositors have at least 3 business days to make a deposit. If any of the 3 weekdays after the end of a semiweekly period is a legal holiday, an employer will have an additional day for each day that is a legal holiday to make the required deposit. For example, if a semiweekly schedule depositor accumulated taxes for payments made on Friday and the following Monday is a legal holiday, the deposit normally due on Wednesday may be made on Thursday (this allows 3 business days to make the deposit).

  4. For Form 941 deposit periods beginning on or after January 1, 2010, the de minimis deposit exception was modified to allow employers to base the de minimis determination on the immediate preceding quarter as a means to provide a safe harbor for employers regarding their deposit obligations.

    Example:

    The employer’s quarterly tax liability for the second quarter of 2010 is $2,450. In the third quarter of 2010, however, the tax liability is $2,550. Under the new Form 941 de minimis deposit exception, if the employer pays the $2,550 with its return for the third quarter of 2010, the amount would be considered timely deposited for that quarter.

    These regulations have no application to the One-Day rule in Treas. Reg. 31.6302–1(c)(3), which requires employers to make a deposit on the next business day if they accumulate $100,000 or more of employment taxes on any day during a deposit period. Therefore, if an employer accumulates $100,000 or more of employment taxes during a deposit period, the employer must make a deposit on the next business day even if the employer’s employment tax liability for the prior quarter met the de minimis deposit exception.

  5. For the de minimis deposit exceptions for employment taxes (Form 941, Form 943, Form 944, Form 945, and Form CT-1), see IRM 20.1.4.6, De Minimis Exception to Deposit Requirements.

  6. Taxes that reach $100,000 or more within a deposit period, must be deposited in time to settle on the next business day for either the monthly or semi-weekly depositor. See IRM 20.1.4.8.6, $100,000/One-Day Rule.

20.1.4.8.1  (01-06-2012)
Extension of Time to Deposit for Form 941 Filers who Filed Form 944 in the Preceding Year

  1. An employer who was in the Employers' Annual Federal Tax Program (Form 944) in the preceding year, but will file Forms 941 instead for the current year, will be deemed to have timely deposited its (Form 941) January deposit obligation(s) under Treas. Reg. 31.6302-1(c)(1) through (4) for the first quarter of the year in which it must file quarterly using Form 941 if the employer deposits the amount of such deposit obligation(s) by March 15th of that year.

    Example:

    Taxpayer F (a monthly depositor) was notified to file Form 944 to report its employment tax liabilities for the 2009 calendar year. F filed Form 944 on January 31, 2010, reporting a total employment tax liability for 2009 of $3,000. Because F's annual employment tax liability for the 2009 taxable year exceeded $1,000 (the eligibility requirement threshold), F was notified to file Form 941 for calendar year 2010. F accumulates $1,000 in employment taxes during January 2010. Because F is a monthly depositor, F's January deposit obligation is due February 15, 2010. F does not deposit these accumulated employment taxes on February 15, 2010. F accumulates $1,500 in employment taxes during February 2010. F's February deposit is due March 15, 2010. F deposits the $2,500 of employment taxes accumulated during January and February on March 15, 2010. Pursuant to Treas. Reg. 31.6302-1T(c)(6), F will be deemed to have timely deposited the employment taxes due for January 2010, and, thus, the IRS will not impose a failure to deposit penalty under IRC 6656 for that month.

  2. For extended administrative waiver provisions see IRM 20.1.4.26.2 (3), Administrative Waivers.

20.1.4.8.2  (01-06-2012)
Lookback Periods for Employment Tax

  1. An employer is considered either a "monthly depositor" or a "semi-weekly depositor" for a calendar year based on an annual determination of the aggregate amount of employment taxes reported on the original return filings (TC 150 amounts) during the employer’s "lookback period."

    1. Form 941 — For quarterly return filers, the "lookback period" for each calendar year is the twelve-month period ending the preceding June 30. For example, the lookback period for calendar year 2011 are the Form 941 return filings during the period from July 1, 2009 to June 30, 2010 (which encompasses the quarters ending 200909, 200912, 201003, and 201006).

      Note:

      The lookback quarterly tax liability amounts for Form 941 filers can be accessed through use of command code BMFOL definer "K" .

    2. Form 941with an intervening Form 944 filed in lookback period — If there is an intervening Form 944 filing in either year of the Form 941 lookback quarters, then the lookback period is defined as the second calendar year preceding the current calendar year. The lookback tax could be either the combined quarterly Form 941 tax amounts or Form 944 tax amount (depending on which type of return(s) posted). For example, the lookback period for a 2011 Form 941 filer who filed Form 944 in either 2009 or 2010 is calendar year 2009.

    3. Form 943 — The lookback period for employers who file Form 943 is the second calendar year preceding the current calendar year. For example, the lookback period for calendar year 2011 is calendar year 2009 (2009 Form 943 (TC 150) tax amount).

    4. Form 944 - The lookback period for employers who file Form 944 is the second calendar year preceding the current calendar year. For example, the lookback period for calendar year 2011 is calendar year 2009 (2009 Form 944 (TC 150) tax amount or 2009 quarterly Form 941 (TC 150) tax amounts).

  2. A new employer is treated as having employment tax liabilities of zero for any quarter or year of the lookback period before the date the employer started or acquired its business.

  3. The deposit status information Computer Paragraph CP 136, CP 136B, CP 137, CP 137A, and/or CP 137B courtesy notices are sent each November to taxpayers that changed deposit frequencies from the prior year (determined by the annual lookback analysis).

  4. Taxpayers should validate the information contained in the CP 136, CP 136B, CP 137, CP 137A, and/or CP 137B courtesy notices. If the lookback liability amount(s) listed on the notice differ from the taxpayer’s records, then it is the taxpayer’s responsibility to determine which deposit schedule to follow.

  5. The notice history on accounts that were issued a CP 136, 136B, 137, 137A, and/or 137B notice can be accessed through the use of Command Code (CC) BMFOL with definer "D" .

  6. Taxpayers should continue depositing, following the deposit schedule they were last issued unless

    • A deposit status information courtesy notice in (3) above is received from the Service or

    • Their current circumstances warrant a change (e.g., incurring a $100,000 liability within a deposit period) or

    • Their deposit status changed due to the taxpayer analysis of the lookback period.

  7. The fact that the taxpayer and/or third party did not receive a deposit status information notice in any of the previous or subsequent years, or did not compare the lookback tax liability amount(s) listed on the deposit status information notice against their tax records, is not grounds for granting an abatement of the FTD Penalty.

  8. Sufficient information is readily available (e.g., Pub 15, (Circular E) Employer's Tax Guide)for the taxpayer to determine the appropriate lookback period, whether the lookback threshold has been met or exceeded and whether the taxpayer has any extraordinary circumstances that would affect the deposit schedule he is currently following.

20.1.4.8.3  (01-06-2012)
Monthly Depositors

  1. If the employer reported employment taxes of $50,000 or less during the one year lookback period, the employer is a monthly depositor and generally must deposit employment taxes on a monthly basis during the calendar year.

  2. Under the monthly rule, each month’s taxes are required to be deposited on or before the 15th day of the following month.

  3. If the 15th of the following month falls on a Saturday, Sunday, or a legal holiday in the District of Columbia, the employer will have until the next business day to make a timely deposit.

    Exception:

    Notice 2010-87 provides transitional relief for determining the timeliness of federal tax deposits (FTDs) under IRC 6302. The notice provides that the Internal Revenue Service will not assert penalties under IRC 6656 for FTDs due in calendar year 2011 that are untimely solely because the depositor treated a statewide legal holiday as if it were a legal holiday in the District of Columbia. Therefore, statewide legal holidays are treated as non-business days for 2011 and prior.

  4. Monthly depositors whose tax reaches the de minimis amount to deposit must enter the Monthly Summary of Federal Tax Liability on the face of the tax return. For more information see IRM 20.1.4.6, De Minimis Exception to Deposit Requirements.

20.1.4.8.4  (01-06-2012)
Semi-weekly Depositors

  1. If the employer reported employment taxes of more than $50,000 during the lookback period, the employer must deposit using the semi-weekly rule. Under this rule, the day a deposit is due is determined by the day of the payroll.

    1. The deposit for a pay day of Wednesday, Thursday, and/or Friday must be made on or before the following Wednesday.

    2. The deposit for a pay day of Saturday, Sunday, Monday, and/or Tuesday must be made on or before the following Friday.

    3. The semi-weekly rule does not require an employer to make deposits twice a week (semi-weekly). Rather, the deposits are due based on a schedule which divides the calendar week into two (semi-weekly) sections.

    4. The semi-weekly depositor whose tax reaches the de minimis amount to deposit must submit a record of federal tax liability (ROFTL) schedule. For more information see IRM 20.1.4.6, De Minimis Exception to Deposit Requirements. Employers who file Form 941, Employer's Quarterly Federal Tax Return, must submit a Schedule B (Form 941), Report of Tax Liability for Semi-weekly Schedule Depositors. Employers who file Form 943, Employer's Annual Tax Return for Agricultural Employees must submit Form 943-A,Agricultural Employer's Record of Federal Tax Liability. Employers who file Form 944, Employer's ANNUAL Federal Tax Return, Form 945, Annual Return of Withheld Federal Income Tax, or Form CT-1, Employer's Annual Railroad Retirement Tax Return must submit Form 945–A, Annual Record of Federal Tax Liability. See IRM Exhibit 20.1.4-12, ROFTL Enclosures.

    5. CC FTDPN displays the deposit due dates taking into account non-business days including weekends, and legal holidays in the District of Columbia. FTDPN treats a statewide legal holiday as non-business days in 2011 and prior years.

  2. In the case of a return period that ends during a semi-weekly deposit period, the employer may be required to make two separate deposits. For example:

    1. The second quarter return period ends on Thursday (June 30th), and the third quarter return period begins on Friday (July 1st).

    2. If the employer had a payroll on Thursday and another on Friday, this employer must make two separate deposits on the following Wednesday. One deposit is for the Thursday payroll (second quarter) and the other deposit is for the Friday payroll (third quarter).

20.1.4.8.5  (01-06-2012)
Rule For Semi-weekly Non-Business Days

  1. Treas. Reg. 31.6302–1(c)(2)(iii) provides that all semi-weekly depositors have at least three business days following the close of the semi-weekly period, to deposit employment taxes accumulated during the semi-weekly period.

  2. Saturdays and Sundays were considered in arriving at a due date for semi-weekly deposits which would allow at least three banking days. However, because federal holidays do not fall on a regularly recurring schedule throughout the calendar year, the following procedures are to be followed in determining the due date:

    1. If one or more of the intervening days between the end of the semi-weekly period and the due date is a legal holiday in the District of Columbia, the deposit due date will be extended by the same number of days.

    2. If the deposit due date is on a legal holiday in the District of Columbia, the due date will be extended to the next day that is not a Saturday, Sunday, or legal holiday in the District of Columbia. For example, if a deposit is due on a Friday, but that Friday is a legal holiday in the District of Columbia, the deposit would be timely if received by the following Monday.

      Exception:

      Notice 2010-87 provides transitional relief for determining the timeliness of federal tax deposits (FTDs) under IRC 6302. The notice provides that the Internal Revenue Service will not assert penalties under IRC 6656 for FTDs due in calendar year 2011 that are untimely solely because the depositor treated a statewide legal holiday as if it were a legal holiday in the District of Columbia. Therefore, statewide legal holidays are treated as non-business days for 2011 and prior.

20.1.4.8.6  (01-06-2012)
$100,000/One-Day Rule

  1. Taxes on Form 941, Form 943, Form 944, Form 945, and Form CT-1 that reach $100,000 or more within a deposit period, must be deposited in time to settle on the next business day for either the monthly or semi-weekly depositor.

    1. A monthly depositor who incurs a $100,000 or more tax liability, when such liability is accumulated within one calendar month, immediately becomes a semi-weekly depositor for the remainder of the current calendar year and the following calendar year. For example, if a $100,000 tax liability is incurred on Wednesday, taxpayer becomes a semi-weekly depositor on Thursday.

    2. A semi-weekly depositor who incurs a $100,000 or greater tax liability, when such liability is accumulated within one semi-weekly period, will return to the semi-weekly deposit schedule the following day. For example, if a $100,000 tax liability is incurred on Wednesday, the taxpayer returns to being a semi-weekly depositor on Thursday.

  2. If the deposit due date for next-day depositors is a legal holiday in the District of Columbia, the due date will be extended to the next day that is not a Saturday, Sunday, or legal holiday in the District of Columbia. For example, if a deposit is due on a Friday, but that Friday is a holiday in the District of Columbia, the deposit would be timely if received by the following Monday.

    Exception:

    Notice 2010-87 provides transitional relief for determining the timeliness of federal tax deposits (FTDs) under IRC 6302. The notice provides that the Internal Revenue Service will not assert penalties under IRC 6656 for FTDs due in calendar year 2011 that are untimely solely because the depositor treated a statewide legal holiday as if it were a legal holiday in the District of Columbia. Therefore, statewide legal holidays are treated as non-business days for 2011 and prior.

20.1.4.8.7  (01-06-2012)
Safe Harbor

  1. No penalty is assessed if:

    1. Any deposit shortfall does not exceed the greater of $100 or 2 percent of the amount of taxes otherwise required to be deposited, and

    2. The deposit shortfall is paid or deposited by the shortfall makeup date. The deposit due date for the shortfall depends upon whether the taxpayer is a monthly or semi-weekly depositor.

  2. The shortfall make-up date for monthly depositors is the due date for the return period in which the underpayment occurs.

  3. The shortfall make-up date for semi-weekly/one-day rule depositors is the earlier of:

    1. The first Wednesday or Friday (whichever comes first) that falls on or after the 15th of the month following the month in which the shortfall occurred or

    2. The due date of the return (for the return period of the tax liability).

      For example, if a semi-weekly schedule depositor has a Form 941 deposit shortfall for a deposit due in July, the makeup date for the amount of the shortfall is the first Wednesday or Friday that falls on or after August 15th, which is the month following the month in which the original deposit was due.

      If however, a semi-weekly schedule depositor has a Form 941 deposit shortfall for a September payroll with deposit due in October, we apply the exception in paragraph (3) b) above and use the due date of the return (October 31st) as the shortfall makeup date and NOT the first Wednesday or Friday that falls on or after November 15th (the month after the month in which the original deposit was due), because November is later, not earlier, than the due date of the return (October 31st).

  4. Taxpayers do not have to apply safe harbor provisions to all deposits in a specific tax period. They may apply the provisions to certain deposits, while paying 100 percent of the others.

  5. Use of the safe harbor option does not change the order in which payments are applied or liabilities are satisfied. The impact of deposit periods must still be recognized when analyzing the funds deposited by the taxpayer and in determining which liability is to be satisfied first by the funds deposited by the taxpayer.

    1. Satisfying a liability before going on to the next liability means matching deposits, payments and/or credits to 100 percent or an appropriate safe harbor amount of the liability.

    2. For each liability, full satisfaction (100 percent) of the liability or safe harbor satisfaction is computed after consideration of all monies deposited on the same date.

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

20.1.4.8.8  (01-06-2012)
Computation of FTD Penalty For Employment Tax

  1. For tax periods beginning on or after January 1, 1993, see IRM Exhibit 20.1.4-4, Forms 941, 943, 944, 945, and CT-1 Deposit Requirements.

  2. To determine if a deposit is timely, compare the entry amounts on the record of federal tax liability (ROFTL) schedule with the deposits made. If the ROFTL schedule is incomplete, blank, or has a negative amount, then average the total tax.

  3. If there is a discrepancy on the ROFTL due to a line item adjustment, adjust the last liability regardless of the dollar amount.

  4. When the $100,000 Rule applies, see IRM 20.1.4.8.6, $100,000/One-Day Rule.

20.1.4.8.8.1  (01-06-2012)
Averaged Penalty

  1. Use the averaging method when the total tax exceeds the de minimis exception to deposit, and the total amount on the record of federal tax liability (ROFTL) schedule is not within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Form 941, Form 943, Form 944, Form 945, or Form CT-1, or the record of federal tax liability (ROFTL) is missing, incomplete, blank, or has negative amounts.

    Note:

    The total tax equals the tax liability (TC 150 plus any TC 291, TC 290, TC 300 tax adjustments) reduced by any Advanced Earned Income Credit (AEIC) allowance (TC 766). The Education, Jobs and Medicaid Assistance Act of 2010 eliminated AEIC for tax years beginning after December 31, 2010.

  2. If there is a discrepancy on the ROFTL information due to adjustments for fraction of cents, sick pay, tips, or group term life insurance, adjust the last liability regardless of the dollar amount.

  3. The method of averaging depends on the type of depositor and the ROFTL information provided. See IRM Exhibit 20.1.4-3, FTD Averaging Methods.

  4. Apply deposits to the resulting averaged liabilities.

20.1.4.9  (01-06-2012)
Form 940

  1. Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, is an annual return used to report federal unemployment tax. For deposit purposes, divide each year into quarters.

  2. To show the correct liability for the deposit period, the taxpayer must list the tax liability in the record of tax liability (ROFTL) schedule if the total tax is more than $500.

  3. See IRM Exhibit 20.1.4-6, Form 940 Deposit Requirements, to determine if the taxpayer made timely deposits.

  4. For tax periods beginning on or after January 1, 2005, the deposit requirements are based on the amount of the tax liability incurred at the end of the deposit period.

    1. If the tax liability at the end of the first, second, or third quarter is $500 or less, it is carried over to the next quarter.

    2. If the tax liability at the end of the fourth quarter is $500 or less, there is no requirement to deposit. The credit card program was expanded to accept employment tax return (Form 941 and 940 series) balance due payments beginning January 1, 2006. Thus, the taxpayer can deposit the tax, pay the tax with a major credit card, or pay the tax with a check or money order with the return, by the return due date.

    3. Federal tax deposits cannot be made by credit card.

    4. If the tax liability at the end of a quarter is over $500, the taxes must be deposited by the last day of the following month.

  5. For tax periods beginning on or after April 1, 1991 and ending on or before December 31, 2004, the deposit requirements are based on the amount of the tax liability incurred at the end of the deposit period.

    1. If the tax liability at the end of the first, second, or third quarter is $100 or less, it is carried over to the next quarter.

    2. If the tax liability at the end of the fourth quarter is $100 or less, there is no requirement to deposit. The taxpayer pays the tax with the return or deposits it by the return due date.

    3. If the tax liability at the end of a quarter is over $100, the taxes must be deposited by the last day of the following month.

20.1.4.9.1  (01-06-2012)
Computing the FTD Penalty Form 940

  1. Refer to Form 940 deposit requirements discussed above to determine if the taxpayer made sufficient deposits.

  2. See IRM Exhibit 20.1.4-6, Form 940 Deposit Requirements, to determine if the taxpayer made timely deposits.

  3. Compare the taxpayer’s liability information from the record of federal tax liability (ROFTL) schedule with the deposits made. If these figures are not available, averaging is used.

  4. If there is an overstatement in the ROFTL schedule, regardless of the dollar amount, or an understatement on the ROFTL for the amount of the credit reduction adjustment, adjust the last liability. Then, compute the penalty as you would for a valid ROFTL schedule.

20.1.4.9.2  (01-06-2012)
Averaged Penalty Form 940

  1. If the record of federal tax liability (ROFTL) schedule is overstated, see IRM 20.1.4.9.1 (4). Average the total tax when the ROFTL is incomplete, blank, or has a negative amount. The ROFTL schedule provided by the taxpayer on Form 940 must equal the tax reported on Form 940, or ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    1. Subtract the credit reduction amount (for tax periods with credit reduction) from the total FUTA tax. Divide the difference by 4 to get a quarterly breakdown.

    2. Add the credit reduction amount back into the fourth quarter. Taxpayers determine the credit reduction amount in the fourth quarter. There is no deposit requirement until that period.

    3. DO NOT include the credit reduction amount in the total being averaged.

    4. Consider the posted deposits as payments against the resulting quarterly liabilities.

  2. Compute the penalty on under-deposits, late deposits, and direct payments. Assess the penalty, if appropriate.

20.1.4.10  (04-20-2010)
Form 720 Reporting Requirements

  1. Form 720, Quarterly Federal Excise Tax Return, and any related attachments, are used to report certain excise taxes. The return is divided into three parts.

    1. Part I reports taxes that are subject to deposit requirements.

    2. Part II reports taxes that are not subject to deposit requirements.

    3. Part III provides a computation of whether there is a balance due or an overpayment.

  2. The net tax liability for each class of tax is reported separately on Schedule A, Excise Tax Liability section\Form 720 by semi-monthly periods:

    • Regular method taxes reported on line 1, and

    • Alternative method taxes on line 2.

  3. Semi-monthly periods consist of two intervals within a month. The first semi-monthly period is the first 15 days of a month. The second semi-monthly period is the 16th day through the last day of a month.

  4. "Net tax liability" is the tax liability incurred during the semi-monthly period, plus or minus any applicable adjustments and claims for that period.

    • For communications and air transportation taxes (IRS Nos. 22, 26, 27, and 28), tax liability is treated as incurred in the semi-monthly period in which the tax is collected, or if the alternative method is elected, is considered as collected.

  5. Form 720, Schedule C, is used to report adjustments to previously reported liabilities and claims unrelated to liabilities in lieu of filing a Form 8849, Claim for Refund of Excise Taxes.

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    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

20.1.4.10.1  (04-20-2010)
Form 720 Filing Requirements

  1. Taxes are identified by an "IRS No." (also known as "Abstract Numbers") on Form 720 and in IRS records. Only one Form 720 is filed for a calendar quarter.

  2. For all taxes, except ozone-depleting chemicals (ODC) floor stock tax (IRS No. 20), the return must be filed by the last day of the month following the end of the calendar quarter. The tax payment for the ODC floor stock tax, a Part II tax, is due by June 30th of each year and must be reported on the Form 720 due July 31st of each year.

  3. If any due date for filing a return falls on a Saturday, Sunday, or legal holiday in the District of Columbia, the taxpayer may file the return on the next business day.

20.1.4.10.2  (05-22-2009)
Payments Form 720

  1. Payment must be made by the return due date without extension.

20.1.4.10.3  (01-06-2012)
Deposits Form 720

  1. Taxes that are subject to deposit requirements are grouped together into the following two classes,

    • Regular method taxes

    • Alternative method taxes

  2. A deposit is due for each semi-monthly period in which a liability is incurred, except in the cases satisfying the de minimis exception to the deposit requirement. See IRM 20.1.4.10.5, De Minimis Exception to Deposit Requirements Form 720.

  3. The amount of each deposit of tax for a semi-monthly period must be at least 95% of the amount of the net tax liability for that period unless the taxpayer elected instead to use the safe harbor (1/6th rule) explained in IRM 20.1.4.10.6, Safe Harbor (1/6th Rule) for Deposits Form 720.

  4. Any underpayment of the liability for the current quarter must be paid by the return due date without extension.

  5. In general, the underpayment must be paid with the return.

  6. An additional deposit must be made in September. For special rules for deposits in September, see IRM 20.1.4.10.7, Special Rules for Deposits in September Form 720.

  7. Beginning January 1, 2011, taxpayers are required to make their excise tax deposits for all of the excise taxes via the electronic funds transfer (EFT) system. For information on the electronic funds transfer payment system requirements, see IRM 20.1.4.2.1, Electronic Funds Transfer (EFT), and IRM 20.1.4.2.2, Electronic Funds Tax Payment System (EFTPS).

20.1.4.10.4  (01-06-2012)
Deposit Rules Form 720

  1. Regular method, Line 1 of Schedule A.

    1. The Regular method applies to all excise taxes, except that taxpayers making deposits of the communication and air transportation taxes (IRS Nos. 22, 26, 27, and 28) have the option to choose to make these deposits under the alternative method by using line 2 of Schedule A.

    2. The deposit of tax for a semi-monthly period is due by the 14th day following the end of the semi-monthly period. Generally, this is the 29th day of the month and the 14th day of the following month. If the 14th day or the 29th day is a Saturday, Sunday, or legal holiday in the District of Columbia, then the deposit is due the immediate preceding day which is not a Saturday, Sunday, or legal holiday. This is not the case for deposits due in September, see IRM 20.1.4.10.7, Special Rules for Deposits in September Form 720.

    3. The net tax liability for each semi-monthly period in the quarter is entered in line 1, Boxes A thru F of Schedule A.

  2. Alternative method, Line 2 of Schedule A.

    1. Only taxpayers depositing the communication and air transportation taxes (local telephone service and teletypewriter exchange service tax (IRS No. 22), transportation of persons by air tax (IRS No. 26), use of international air travel facilities tax (IRS No. 27), and transportation of property by air tax (IRS No. 28)) may elect the alternative method.

    2. Under the Alternative Method, amounts considered as collected are reported on line 2 of Schedule A.

    3. See IRM Exhibit 20.1.4-7, Form 720 Return Due Dates.

  3. Under the alternative method:

    1. The tax included in amounts billed or tickets sold during a semi-monthly period is considered as collected during the first seven days of the second semi-monthly period following the semi-monthly period in which the amounts were billed or tickets sold.

      Example:

      The tax included in amounts billed between January 1 and January 15, 2010, is considered as collected during the period February 1 through February 7, 2010.

    2. The amount reported on Schedule A for each semi-monthly period is the tax considered as collected during that period.

      Example:

      The tax considered as collected during the period February 1 through February 7, 2010, is the amount reported for the period February 1 through February 15, 2010.

    3. The net tax liability for each semi-monthly period in the quarter is entered in line 2, Boxes M thru R of Schedule A.

      Example:

      The tax considered as collected during the period February 1 through February 7, 2010, is reported in Box O of Schedule A.

    4. The deposit of tax considered as collected for the first semi-monthly period of the month is due by the third business day after the seventh day of that semi-monthly period (generally the 10th day of that month). A business day does not include a Saturday, Sunday, or legal holiday in the District of Columbia.

      Example:

      The deposit for the semi-monthly period beginning on February 1, 2010, (this is a deposit of the tax included in amounts billed between January 1 and January 15, 2010), and considered as collected between February 1 and February 7, 2010, is due on February 10, 2010, a Wednesday.

  4. A taxpayer can change to the regular rule of computing deposits only at the beginning of a calendar quarter. The taxpayer must notify the IRS before a new choice is made so that proper adjustments may be made in order to properly reflect that taxpayer collections of excise tax.

20.1.4.10.5  (04-20-2010)
De Minimis Exception to Deposit Requirements Form 720

  1. Deposits are not required if the net tax liability for the quarter does not exceed $2,500.

  2. The $2,500 "de minimis exception" applies only to taxes listed in Part I, Form 720.

    Example:

    A return is filed reporting $1,950 in Part I taxes, and $4,000 in Part II taxes. Therefore, no deposits would be due against the total liability of $5,950. The $4,000 Part II taxes are not subject to deposit requirements, and the $1,950 Part I taxes are below the $2,500 "de minimis exception."

  3. To compute the $2,500 threshold, exclude taxes reported on a one-time filing, which are not subject to deposit. For example, no deposits are required for a one-time filing of gas guzzler tax (IRS No. 40). A taxpayer is eligible to make a one-time filing of Form 720 of the gas guzzler tax (IRS No. 40) if the taxpayer imported a gas guzzling automobile, does not import gas guzzling automobiles in the course of the taxpayer’s trade or business, and is not required to file Form 720 reporting excise taxes for the calendar quarter, except for the one-time filing. The taxpayer must check the "final return block" on the front of Form 720.

20.1.4.10.6  (01-06-2012)
Safe Harbor (1/6th Rule) for Deposits Form 720

  1. The safe harbor (1/6th Rule) applies separately to deposits under the regular method and alternative method.

  2. If the conditions of the safe harbor (1/6th rule) are met, a taxpayer that has made timely deposits by electronic funds transfer (EFT) of less than the full amount of net tax liability for each semi-monthly period in the quarter, is considered to have satisfied the deposit requirement for the quarter. For information on the electronic funds transfer payment system requirements, see IRM 20.1.4.2.1, Electronic Funds Transfer (EFT) and IRM 20.1.4.2.2, Electronic Funds Tax Payment System (EFTPS). See also IRM 20.1.4.10.7, Special Rules for Deposits in September Form 720.

20.1.4.10.6.1  (01-06-2012)
Lookback Quarter Safe Harbor (1/6th Rule) Form 720

  1. The lookback quarter liability safe harbor (1/6th rule) applies to any entity that filed Form 720 for that class of tax for the second preceding quarter (the lookback quarter). The 1/6th rule applies without regard to the amount of the liability for the current quarter.

  2. To satisfy the deposit requirements under the 1/6th rule, the taxpayer must meet the following conditions:

    1. The deposit for each semi-monthly period in the current quarter, must be at least 1/6th of the net tax liability of the lookback quarter, for the same class of tax.

    2. Each deposit must be timely made by electronic funds transfer (EFT).

    3. Any underpayment of the liability for the current quarter must be paid by the return due date without extension.

  3. In general, the underpayment must be paid with the return.

  4. If the taxpayer has elected the alternate method for the communications and air transportation taxes (IRS No. 22, 26, 27, and 28) then do not include these taxes when determining the net tax liability for the regular method.

  5. If a tax rate increase goes into effect for a quarter, the following additional condition applies.

    1. The 1/6th rule does not apply for the first and second calendar quarters, beginning on or after the effective date of the increase, unless the deposit of taxes for each semi-monthly period in the calendar quarter is not less than 1/6th of the liability the taxpayer would have had for the look-back quarter, if the increased tax rate had been in effect during the look-back quarter.

    2. Thus, if tax rates are increased, taxpayers must deposit 1/6th of the amount that they would have been liable for in the look-back quarter, had the higher rate applied at that time.

  6. Use of the safe harbor (1/6th rule) is not permitted unless a tax was imposed throughout the look-back quarter. A separate determination is made for regular method and alternative method taxes.

    1. For regular method taxes, the person's liability cannot include any regular method tax that was not imposed at all times during the look-back quarter or a tax on a chemical not subject to tax at all times during the look-back quarter.

    2. For alternative method taxes, the person's liability cannot include any alternative method tax that was not imposed at all times during the look-back quarter and the month preceding the look-back quarter.

      See examples below.

      1. A taxpayer reported only regular method taxes (TC 150 adjusted by TC 29X) of $15,000 in the look-back quarter with credits of $3,000, resulting in a net tax liability of $12,000. Based on the net tax liability of $12,000, the required deposit (for each semi-monthly period) using the 1/6th rule in the current quarter is $2,000. The tax can be deposited with the return.

      2. A taxpayer reports only regular method taxes (TC 150 adjusted by TC 29X) of $15,000 in the look-back quarter with credits of $18,000, resulting in a net tax liability of zero. Based on the net tax liability of zero, the required deposit (for each semi-monthly period) using the 1/6th rule in the current quarter is zero.

      3. A taxpayer reported zero taxes (TC 150 adjusted by TC 29X) in the look-back quarter with credits of $3,000, resulting in a net tax of zero. The safe harbor 1/6th rule is not permitted on the net tax of zero (as allowed in example #2 above) because there was no tax imposed (TC 150 adjusted by TC 29X).

20.1.4.10.7  (05-22-2009)
Special Rules for Deposits in September Form 720

  1. An additional deposit is required during the third quarter of each year in September for each class of tax.

20.1.4.10.7.1  (04-20-2010)
Alternative Method Form 720

  1. In the case of alternative method taxes charged (included in amounts billed or tickets sold) during the first semi-monthly period in September, separate deposits are required for the taxes charged during the period September 1st to 11th and the period September 12th to 15th.

  2. For taxes charged during the period beginning September 1st, the deposit must be made by September 29th. If the due date falls on a Saturday, the deposit is due on the preceding Friday. If the due date falls on a Sunday the deposit is due on the following Monday.

  3. For taxes charged during the period September 1st to 11th, the net tax liability is entered in Box S of Schedule A for the fourth quarter return.

  4. For taxes charged during the period ending September 15th, the deposit must be made by the due date under the alternative method for making deposits for the first semi-monthly period in October.

  5. For taxes charged during the period September 12th to 15th, the net tax liability is entered in Box M of Schedule A for the fourth quarter return.

  6. The amount of each deposit for these periods must be at least the amount of alternative method taxes charged during the periods, unless a safe harbor rule applies.

20.1.4.10.7.2  (01-06-2012)
Special Regular Method Safe Harbor (1/6th Rule) Form 720

  1. The 1/6th rule does not apply for the third calendar quarter unless—

    1. The deposit of taxes for the period September 16th to 26th is not less than 11/90ths of the net tax liability reported for the same class of tax for the lookback quarter; and

    2. The total deposit of taxes for the second semi-monthly period in September is not less than 1/6th of the net tax liability reported for the same class of tax for the lookback quarter.

20.1.4.10.7.3  (01-06-2012)
Alternate Method Safe Harbor (1/6th Rule) Form 720

  1. The 1/6th rule does not apply for the fourth calendar quarter unless—

    1. The deposit for alternative method taxes charged during the period September 1st to 11th is not less than 11/90ths of the net tax liability reported for alternative method taxes for the lookback quarter; and

    2. The total deposit for alternative method taxes charged during the first semi-monthly period in September is not less than 1/6th of the net tax liability reported for alternative method taxes for the lookback quarter.

20.1.4.10.8  (01-06-2012)
Computing the FTD Penalty Form 720

  1. A deposit must be made for each semi-monthly period for which there is an entry in a box on Schedule A. The amount of each deposit for a semi-monthly period must be at least the amount of the net tax liability entered in the appropriate box on Schedule A for that period unless a safe harbor rule applies.

  2. To determine whether a sufficient amount has been deposited, Schedule A must be completed. If Schedule A is completed, compare the amounts entered on Schedule A to the deposits and payments the taxpayer has made.

  3. The taxpayer is instructed to separate any portion of a liability that qualifies for the "Special September Rule" from Box F or M, and enter that portion of the September liability in the Special September Rule box. Therefore, a September liability amount entered in Box M or F of Schedule A, with no accompanying entry in the "Special September Rule" box, is not an indicator that a "Special September Rule" liability was incurred and needs to be separated from Box M or F. See the "Special September Rule" instructions shown below

    Instructions for Reporting Under the Special September Rule

    • Regular Method: the period beginning Sept. 16th and ending Sept. 25/26th should be reported in Box G, "Special rule for September."

    • Alternative Method: the period beginning Sept. 1st and ending Sept. 10/11th should be reported in Box S, "Special rule for September," in the fourth quarter return.

    Instructions for remaining days in September Period

    • Regular Method: enter the liability for the period beginning Sept. 26/27th and ending Sept. 30th in Box F.

    • Alternative Method: enter the tax included in the amounts billed or tickets sold for the period beginning Sept. 11/12th and ending Sept. 15th in Box M of the fourth quarter return. Enter the tax included in amounts billed or tickets sold during the period beginning Sept. 16th and ending Sept. 30th in Box N of the fourth quarter return.

  4. If the deposit is timely made by electronic funds transfer (EFT) and equals or exceeds the amount entered in the Schedule A box for the semi-monthly period, the deposit requirement for that class of tax for the semi-monthly period is satisfied.

  5. If Schedule A is not completed, penalties must be proposed. Proposing a penalty allows the taxpayer time to provide needed information.

    1. Attempt to contact the taxpayer by telephone to request a completed Schedule A.

    2. If unable to secure the Schedule A by telephone, then correspond with the taxpayer using Letter 313C, FTD Penalty Proposal.

    3. If a new Schedule A is received for the review quarter, determine whether a failure to deposit penalty applies.

    4. If a new Schedule A is not received, compute and assess an averaged penalty.

  6. A penalty may be imposed if the taxpayer has not made timely deposits in sufficient amounts by electronic funds transfer (EFT). Therefore, the taxpayer must meet the following three conditions:

    • Timeliness

    • Sufficient amount

    • EFT deposit

20.1.4.10.8.1  (01-06-2012)
Timeliness Form 720

  1. If the deposit is received by the deposit due date for each rule, the deposit is timely. See IRM Exhibit 20.1.4-7, Form 720 Return Due Dates, and IRM IRM 20.1.4.7.2, Deposit Due Dates.

20.1.4.10.8.2  (01-06-2012)
Sufficient Amount Form 720

  1. If the deposit is timely made by electronic funds transfer (EFT), but is less than 95% of the amount entered in the Schedule A box for the semi-monthly period, determine the following: (Check to see if the safe harbor (1/6th rule) is satisfied).

    1. The lookback quarter liability is the net tax liability amount entered on line 1b, or 2b, whichever applies, of the Schedule A for the lookback quarter. Divide that amount by six to determine the amount required to be deposited in each semi-monthly period for the current quarter under the safe harbor (1/6th rule).

    2. Compare each deposit (including any credits from prior quarters or semi-monthly periods) with the amount required to be deposited in each semi-monthly period.

    3. If the amounts deposited are sufficient and the amount of any underpayment is paid by the due date of the return, then the safe harbor (1/6th rule) is satisfied and no penalty is appropriate. An underpayment is the difference between the amount entered on line 1b, or 2b, whichever applies, of the current quarter Schedule A, and the same line of the Schedule A for the lookback quarter.

    4. If the safe harbor (1/6th rule) is not satisfied for any semi-monthly period within the quarter, the 1/6th rule does not apply for that quarter. For example, even if five of the six semi-monthly periods within the quarter are satisfied, and only one semi-monthly period is not satisfied, then the safe harbor (1/6th rule) cannot be used for any of the liability periods during the quarter. However, no taxpayer has to pay more than he/she actually owes. For example, if the deposit for the sixth semi-monthly liability period is less than the 1/6th rule amount, but the total deposits fully pay the liability for the entire quarter, no penalty applies.

  2. If the safe harbor (1/6th rule) is also not satisfied, compute the penalty. For each semi-monthly period, subtract the amount deposited from the amount entered in the Schedule A box and compute the penalty based on the difference.

  3. If the underpayment, for the safe harbor (1/6th rule), is not paid by the due date of the return, then the safe harbor (1/6th rule) does not apply for the entire quarter. For each semi-monthly period, subtract the amount deposited from the amount entered in the Schedule A box and compute the penalty based on the difference.

20.1.4.10.8.3  (04-20-2010)
Averaged Penalty Form 720

  1. Whenever Schedule A is missing and a Schedule A is not received after contact with the taxpayer, determine whether a penalty applies by computing the averaged semi-monthly liability for taxes reported on the Schedule A.

  2. The liability breakdown provided by the taxpayer on Form 720 must equal the tax reported,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

20.1.4.10.8.4  (05-22-2009)
Transitional Rule for the Alternative Method Form 720

  1. The alternative method can only be elected by taxpayers depositing the communications and air transportation taxes (the local telephone service tax and teletypewriter exchange service tax (IRS No. 22), the transportation of persons by air tax (IRS No. 26), the use of international air travel facilities tax (IRS No. 27), and the transportation of property by air tax (IRS No. 28). If a taxpayer is using the alternative method, amounts considered as collected are reported on Schedule A.

  2. There is a special transitional rule which applies and can be used by any taxpayer who has been making deposits under the alternative method.

    1. This transition rules makes it appear as if the taxpayer has reported the tax too soon on Schedule A. This early reporting of tax makes otherwise timely deposits appear to be late.

    2. For detailed information on this transitional rule see Notice 1009, Information on the Alternative Method of Reporting on Form 720, Schedule A.

  3. If it appears the taxpayer reported tax too soon, call or send Letter 313C (enclosing Notice 1009 and Schedule A) to inform the taxpayer about the problem. Allow the taxpayer time to respond (30 days). See IRM 20.1.4.16, Issuing Averaged FTD Penalty Proposals—Letter 313C.

20.1.4.10.8.5  (05-22-2009)
Quarter in Question Form 720

  1. If the taxpayer sends in a corrected Schedule A, with

    1. The first two semi-monthly periods blank,

    2. Any of the other four semi-monthly periods showing a liability amount, and

    3. The amounts in the boxes match the deposits timely received, then

    4. There is no penalty.

    5. Disregard the first two semi-monthly (blank) periods. These were reported on the previous Schedule A.

  2. The taxpayer has only one opportunity to "transition" to the correct reporting period.

20.1.4.11  (01-06-2012)
Form 1042

  1. Taxpayers file Form 1042,Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, to report and pay tax due on income derived from sources in the United States. Currently, Form 1042 is processed only at the Ogden Campus.

  2. This form is filed by a withholding agent (who could be an individual, Indian tribal government, trust, estate, partnership, corporation, nominee (under IRC 1446), government agency, association, or tax-exempt foundation) that may be domestic or foreign, who receives, controls, has custody or disposes of, or pays income from sources within the United States.

  3. Taxpayers may file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns.

  4. Form 7004 DOES NOT provide additional time to pay the taxes.

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. See IRM 20.1.4.7.2 (9) # and IRM 20.1.4.7.2 (10) #

20.1.4.11.1  (01-06-2012)
Deposit Requirements Form 1042

  1. For deposit purposes, divide each month into four periods ending on the 7th, 15th, 22nd, and last day of the month. These periods are called quarter-monthly periods. The quarter-monthly periods and the monthly totals are labeled 1 through 60 on the tax return.

  2. The taxpayer must list the tax liability in the record of federal tax liability (ROFTL) section if the yearly tax is at least $200.

  3. Deposit requirements are based on the amount of undeposited taxes at the end of the deposit period. Exceptions may apply due to Foreign Tax Treaties.

  4. See IRM Exhibit 20.1.4-8, Form 1042 Deposit Requirements For All Periods.

    1. If the taxes at the end of a month (other than December) are under $200, they are carried to the next month.

    2. If taxes at the end of December are under $200, they may be paid with the return or deposited by the return due date.

    3. If the taxes at the end of a month are $200 or more, but less than $2,000, the deposits must be made by the 15th of the following month.

    4. If an earlier quarter-monthly deposit was made and taxes are $200 or more but less than $2,000 (in a month other than December), the taxes are carried to the next month. For the month of December, the deposits must be made by the return due date.

    5. If undeposited taxes at the end of a quarter-monthly period are $2,000 or more, the deposits must be made within three business days after the quarterly-monthly period.

20.1.4.11.2  (01-06-2012)
Special Deposit Requirements Form 1042 (Tax Periods 2010 and Prior)

  1. 90 Percent/Safe Harbor Rule - TD 9507 removed the 90 percent safe harbor rule from Treas. Reg. 1.6302-2 beginning for tax periods 2011 and subsequent. For tax periods 2010 and prior, taxpayers are considered to have met the $2,000 deposit requirement in the above, if they comply with all of the requirements listed below in IRM 20.1.4.11.2 (2)

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 20.1.4.3, Restrictions on Assessments.#

  2. At least 90 percent of the liability is paid timely, and the remaining balance for each month is paid as follows:

    1. The taxpayer deposits underpayments from a month (other than December) with or before the first deposit due after the 15th day of the following month. If there are no deposits due after that date, the taxpayer deposits underpayments of $200 or more by January 31st. The taxpayer pays underpayment amounts under $200 with the return or deposits them by the return due date.

    2. The taxpayer deposits December underpayments of $200 or more by January 31.

    3. The taxpayer pays December underpayment amounts under $200 with the return or deposits them by the return due date.
      Master File computes the penalty for the safe harbor portion of the deposit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Apply deposits made after the 15th day of the following month as follows:

    1. Satisfy any safe harbor underpayment from the prior month.

    2. If the deposits do not satisfy the full amount, apply them in the order in which they accrued.

  4. See IRM Exhibit 20.1.4-8, Form 1042 Deposit Requirements For All Periods, and IRM 20.1.4.7.2, Deposit Due Dates, to determine if the taxpayer made timely deposits.

  5. Taxpayers do not have to apply the safe harbor provisions to all deposits in a specific tax period. They may apply the provisions to certain deposits, while paying 100 percent of the others.

20.1.4.11.3  (01-06-2012)
Computing the FTD Penalty Form 1042

  1. Refer to Form 1042 deposit requirements to determine if sufficient deposits were made. See IRM Exhibit 20.1.4-8, Form 1042 Deposit Requirements For All Periods.

  2. Compare the tax liability amounts entered on the record of federal tax liability (ROFTL) with the deposits made. If the ROFTL is incomplete, blank, or has a negative amount, then average the total tax.

  3. There is a time sensitive four-tier penalty system for late deposits. The penalty rate assessed depends on the number of days a deposit is late. See IRM 20.1.4.7.1, Time Sensitive Four Tier Penalty System.

  4. Remember that exceptions apply only to the last month of the reporting period (December). They do not apply to the last month of each quarter (March, June, and September).

20.1.4.11.4  (01-06-2012)
Averaged Penalty Form 1042

  1. If the total tax liability reported on the record of federal tax liability (ROFTL)≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Form 1042, or the ROFTL is incomplete, blank, or has a negative amount, then average the total tax as shown below:

    1. Divide the tax liability by 24.

    2. Consider the results as the tax liability for ROFTL periods 2nd, 4th, 6th, 8th, 10th. 12th, 14th, 16th, 18th, 20th, 22nd, 24th, 26th, 28th, 30th, 32nd, 34th, 36th, 38th, 40th, 42nd, 44th, 46th, and 48th.

    3. Compute the penalty.

20.1.4.11.5  (05-22-2009)
Deficiency Procedures Form 1042

  1. The determination of whether a penalty will be subject to a statutory notice of deficiency procedure usually depends on whether the underlying tax is subject to deficiency procedures.

  2. IRC 1441, Withholding of Income Tax on Nonresident Aliens, is subject to deficiency procedures. IRC 6665, Applicable Rules, does not exclude IRC 6656, Failure To Make Deposit Of Taxes.

  3. The statutory notice of deficiency procedures will apply to a failure to deposit penalty as well as any underpayment of tax. Even if there is not an underpayment of tax, statutory notice of deficiency procedures apply to the failure to deposit penalty as it relates to Form 1042.

  4. For additional information regarding deficiency vs. non-deficiency procedures, see IRM 20.1.1.4.2, Deficiency Procedures, and IRM 20.1.1.4.2.1, Non-deficiency Procedures.

20.1.4.12  (05-22-2009)
Form CT–1

  1. The federally administered railroad retirement system covers railroad employees and provides benefits similar to those under the Social Security system (Tier 1 benefits) as well as benefits similar to those under a private pension (Tier 2 benefits).

  2. Form CT-1 is processed at Cincinnati Submission Processing Campus. Penalty adjustments on Form CT–1 should be made only after contacting the Cincinnati Campus.

    1. Forms, claims or correspondence received at other campuses must be routed or coordinated with
      IRS Large Corp/Technical Unit
      Stop 537G
      201 W. Rivercenter Blvd
      Covington, KY 41011

    2. For inquiries received via the toll-free line, prepare Form 4442 and fax to:
      Technical Unit at 859-669-5018, Team 401
      Technical Unit at 859-669-4776, Team 402

20.1.4.12.1  (04-20-2010)
Filing Requirements Form CT-1

  1. Form CT–1, Employer's Annual Railroad Retirement Tax Return, is an annual return generally due the last day of February of the following year. The Form CT–1 is used to report and pay Railroad Retirement Tax (RRTA).

  2. Form CT–1 consists of two major parts (Part I and II).

    1. Part I — Railroad Retirement Taxes. The total railroad retirement taxes based on compensation should equal the total tax liability for the year from Part II, Monthly Summary of Railroad Retirement Tax Liability, or the total tax liability from Form 945–A, Annual Record of Federal Tax Liability.

    2. Part II — Record of Railroad Retirement Tax Liability. Deposits are due as described below in IRM 20.1.4.12.2, Deposit Requirements RRTA Part II and in IRM 20.1.4.12.3, Computing the FTD Penalty RRTA.

    .

  3. Taxpayers must complete Part II, Monthly Summary of Railroad Retirement Tax Liability if they are monthly depositors.

  4. Taxpayers must complete Form 945-A, Annual Record of Federal Tax Liability, if they:

    1. Are semi-weekly depositors, or

    2. Accumulate $100,000 or more on any day during a deposit period. See IRM 20.1.4.8.6, $100,000/One-Day Rule.

  5. Both Part II, Monthly Summary of Railroad Retirement Tax Liability, and Form 945-A, are used to report tax liabilities reported on Form CT–1. This should be a summary of tax liability, NOT a summary of deposits.

20.1.4.12.2  (01-06-2012)
Deposit Requirements RRTA Part II

  1. The taxpayer must deposit by EFT if a taxpayer’s total deposits of taxes, during the determination period, exceed a prescribed dollar threshold. See IRM Exhibit 20.1.4-2, Electronic Deposit Requirement Threshold Amounts, and IRM 21.7.1.4.8.1.3, EFTPS Deposit Requirements. After December 31, 2010, all deposits must be by EFT.

  2. When depositing RRTA taxes the taxpayer will be either a monthly or semi-weekly depositor based on the lookback period.

  3. The deposit requirements for Form CT–1 are generally the same as the deposit requirements for Form 941.

  4. If the yearly tax liability is less than $2,500 for return periods beginning on or after January 1, 2001, no deposits are required. The total tax liability for the period can be paid with a timely filed return instead. See IRM 20.1.4.6, De Minimis Exception to Deposit Requirements.

  5. A taxpayer must follow the monthly deposit schedule if the total RRTA taxes for the lookback period are $50,000 or less. The lookback period is the second calendar year preceding the current calendar year.

    1. Tax liability for a calendar month must be deposited by the 15th day of the following month.

    2. Any safe harbor shortfall (make-up) amount is due on the filing due date for the return period in which the underpayment occurs. Payment may accompany the return.

  6. A taxpayer must follow the semi-weekly deposit schedule if the total RRTA taxes during the lookback period are more than $50,000.

    1. Tax liabilities for payments made on Wednesday, Thursday, and/or Friday must be deposited by the following Wednesday.

    2. Tax liabilities for payments made on Saturday, Sunday, Monday, and/or Tuesday must be deposited by the following Friday.

    3. The shortfall (make-up date) for semi-weekly/one-day depositors is the first Wednesday or Friday (whichever is earlier) falling on or after the 15th day of the month following the month in which the deposit was required to be made, or if earlier, the due date for the return period.


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