$100,000 Next-Day Deposit Rule
If a business accumulates $100,000 or more in Federal tax liability on any day during a monthly or semiweekly deposit period, you must deposit the tax by the next business day, whether you are a monthly or semiweekly schedule depositor.
If the Federal tax deposit is made after the next business day, the business may be subject to fees and penalties from the IRS, which could be 10% of the total Federal tax liability.
Note: If running multiple payrolls in the same tax deposit period, be sure to check the total Federal tax liability, combining all payrolls processed within that period.
100K accumulation resets once the company hits 100K in Federal tax liability.
If a company runs multiple payrolls in the same tax deposit period and hits 100K at any point, the accumulation is reset on the next payroll, in that tax period.
Important things to know regarding Federal tax deposits
Semi-weekly Federal deposit schedules
Semi-weekly depositors have 3 business days after the end of a semi-weekly period to make a deposit. If any of the 3 business days is a legal Holiday, the business has an additional day for each day that is a holiday to make the deposit. (see legal holiday’s below).
|IF the payday falls on a . . .
||THEN deposit taxes bythe following . . .
|Wednesday, Thursday, and/or Friday
|Saturday, Sunday, Monday, and/or Tuesday
Monthly Federal Deposit Schedules
Employers on a Monthly Federal tax deposit schedule must pay their taxes by the 15th of the month the following month. Example: May Liabilities would be due by June 15th. *Tax deposits can only be made on business days.
The term “legal holiday” means any legal holiday in the District of Columbia. IRS is closed and will not accept payments. See Federal Holidays for the list of holidays.
Most common reasons for 100K Federal tax liability
- Quarter end bonus payroll
- Year-end bonus payroll
- Year-end fringe benefit adjustments
- Multiple high salaried employees
How does Payville handle 100K Federal tax liability?
The check date must be two business days after the processing date to ensure timely deposit of the Federal tax liability.
Your CXR will send you wire transfer instructions along with the total amount to wire.
You as the business owner, will need to wire transfer the total tax amount due to Payville, the same day as processing. The total tax amount due, includes both State and Federal tax liabilities.
Payville USA will receive the wire transfer and initiate the Federal tax payment to be paid the following business day to ensure your business is in compliance with the IRS regulations.
Penalties and interest- If the Federal tax deposit is not made the following business day, the IRS will impose a penalty of 10% of the total tax liability, payable by your company to the IRS.