IRS Explains New Deposit Rules to Employers

The Internal Revenue Service is now mailing notices to the country's six million employers, explaining the new deposit schedule they will follow for their 1993 employment taxes. The mailout will continue over the next couple of weeks. The new rules easing the tax deposit burden take effect January 1, 1993, but include a one-year transition period to allow employers adequate time to change their payroll systems.

Employers who reported $50,000 or less of employment taxes during the period of July 1, 1991, through June 30, 1992, will deposit their taxes for each month in 1993 by the 15th of the following month. About 75 percent of employers are expected to be on this schedule. All others will be following the semi-weekly rule, depositing by the Wednesday or Friday after payday -- by Wednesday for paydays falling on Wednesday, Thursday or Friday; by Friday for all other paydays.

Employers with under $500 of taxes for the calendar quarter may skip the deposits and pay the taxes with their quarterly employment tax return. Employers accumulating $100,000 during their normal monthly or semi-weekly period must deposit by the next banking day.

All new employers will be monthly depositors. The new rules do not apply to domestic household employers. Special rules for holidays will ensure that employers have at least three banking days after payday to make deposits. Employers will not face penalties if their deposits satisfy either the old or new rules during 1993.

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