Filing Your Return(s) and Paying Taxes
Federal Tax Deposits (FTD)
In general, you must deposit income tax withheld and both the
employer and employee social security and Medicare taxes (minus any advance EIC payments)
by mailing or delivering a check, money order, or cash to an authorized financial
institution or Federal Reserve bank. However, some taxpayers are required to deposit by
electronic funds transfer.
When To Deposit
There are two deposit schedules--monthly or semiweekly--for determining when you deposit
social security, Medicare, and withheld income taxes. These schedules
tell you when a deposit is due after a tax liability arises (e.g., when you have a
payday). Prior to the beginning of each calendar year, you must determine which of the two
deposit schedules you are required to use. The deposit schedule you must use is based on
the total tax liability you reported on Form 941 during a four-quarter lookback period
discussed below. Your deposit schedule is not determined by how often you pay your
employees or make deposits.
Electronic Federal Tax Payment System
(EFTPS)
Lookback
Period
Table 1 Lookback
Period for Calendar Year 2002
Monthly
Deposit Schedule
Semiweekly
Deposit Schedule
Table
2. Semiweekly Deposit Schedule
How
to Deposit
When
to Deposit Employment Taxes
Making Deposits With FTD Coupons. If you are not making
deposits by EFTPS, use Form 8109, Federal Tax
Deposit Coupon, to make the deposits at an authorized financial institution or Federal
Reserve bank.
For new employers, the IRS will send you a Federal Tax Deposit
(FTD) coupon book 5 to 6 weeks after you receive an employer identification
number (EIN). (Apply for an EIN on Form
SS 4.) If you do not receive your resupply of FTD coupons,
call 1-800-829-1040.
It is very important to clearly mark the correct type of tax and tax
period on each FTD coupon.
Importance of Timely Deposits
If you do not timely pre-pay your tax using deposit coupons or if
you were not required to make any deposit and/or did not include your payment when you
filed your return, we will charge you interest and penalties on any unpaid balance.
We may charge you penalties for not depositing employment taxes
timely up to 14% of the amount not deposited, depending upon how many days late you make
the deposit.
If you do not pay withheld trust fund taxes, we may take additional
collection action.
- We can require you to file and pay your taxes on a monthly rather
than quarterly basis.
- We can also require you to open a special bank account and deposit
the amounts required to be withheld within two banking days after you pay wages to your
employees. If, after you are required to do so, you do not open a special account and make
timely deposits, you may be found guilty of a misdemeanor.
To encourage prompt payment of withheld income and employment taxes,
including Social Security and railroad retirement taxes or collected excise taxes,
Congress passed a law that provides for the trust fund recovery penalty. This penalty is
used as a tool for collection of unpaid employment taxes. The penalty also applies to
those excise taxes which are commonly referred to as collected excise taxes.
If you are a responsible person, we can apply this penalty against
you immediately after you do not pay trust fund taxes in response to a notice and demand
for payment. Also, we can apply this penalty regardless of whether you are out of business
or without assets.
Caution: Once we assert the penalty, we can take collection
action against your individual assets, such as filing a Federal tax lien if you are the
responsible person(s).
Publication
15 Circular E Employers Tax Guide