Quarterly Requirement. Employers with federal deposit liability of less than $2,500 in the current quarter or state withholdings of $1,500 or less in the prior quarter must pay the entire amount to the Internal Revenue Service or Minnesota Department of Revenue quarterly. The payment is due the last day of the month following the end of the quarter. General Rule for Making Deposits (Minnesota). If an employer withholds more than $1,500 in Minnesota tax during the previous quarter, the employer is required to make Minnesota deposits in the next quarter as often as it is required to make federal deposits, either monthly or semiweekly. Monthly Requirement. New employers and employers whose total federal tax liability for the four quarters in the lookback period is $50,000 or less are required to deposit employment taxes each month by the fifteenth day of the following month. The lookback period is the four quarters beginning July 1 of the second preceding year and ending June 30 of the prior year. Employers should consult IRS Publication 15, Circular E , and the Minnesota Department of Revenue Income Tax Withholding Instruction Booklet and Tax Tables for specific rules and exceptions. Semi-weekly Requirement. Employers whose total tax liability for the lookback period is more than $50,000 are required to deposit employment taxes on Wednesday and/or Friday, according to their payroll day. Employers should consult IRS Publication 15, Circular E, Employer’s Tax Guide, and the Minnesota Department of Revenue Income Tax Withholding Instructions for specific rules. One-Day Requirement (Federal only). Employers who accumulate taxes of $100,000 or more on any day during a deposit period are required to make the deposit by the close of the next banking day, whether they are a monthly or semi-weekly depositor. Personal Liability for Payment of Employment Taxes. To encourage prompt payment of withheld income and employment taxes, including Social Security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP (Trust Fund Recovery Penalty). These taxes are called trust fund taxes because you actually hold the employee’s money in trust until you make a federal tax deposit in that amount. In the event that an employer fails to pay its employment taxes, its individual officers, members, directors, owners or others, who are responsible for collecting or paying withheld income and employment taxes and willfully fail to collect or pay them may be held personally liable for unpaid taxes. See IRS information, Employment Taxes and the Trust Fund Recovery Penalty (TFRP). Electronic Federal Tax Payment System (EFTPS) . The EFTPS is the system sponsored by the U.S. Department of Treasury that taxpayers use to initiate Federal tax payments electronically. As of January 1, 2011, all required Federal Tax Deposits must be made electronically using EFTPS. For more information go to EFTPS or call the EFTPS Customer Service Center at 800-555-4477, or 800- 733-4829 (TDD hearing-impaired), or 800-244-4829 (Español). Electronic State Deposits. State tax deposits must be made electronically if state tax withholdings total more than $10,000 in Minnesota income tax during the last 12-month period ending June 30, if they use a payroll service company, or they are required to electronically pay any other Minnesota business tax to the Minnesota Department of Revenue. If you are required to pay business taxes electronically for one year, you must continue to do so for all future years. For more information see the Minnesota Income Tax Withholding Instruction Booklet and Tax Tables.
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